Canada dollar rises against most peers after GDP tops forecast

Economic Output

The Institute for Supply Management’s index of U.S. factories rose to 56.4 in October, the highest since April 2011, from 56.2 a month earlier, the Tempe, Arizona-based group’s report showed today.

The median forecast in a Bloomberg survey of 83 economists was 55. Estimates ranged from 52.5 to 57.5. Readings above 50 indicate growth.

Manufacturing strengthened from China to South Korea last month in a sign that growth risks are abating in Asia and expansion may pick up this quarter.

“It just slightly increases the odds of a December taper,” said Greg Anderson, head of global foreign exchange strategy at Bank of Montreal, by phone from New York. “That’s still not the market’s core scenario, the market’s core scenario is still March. But hey, good ISM tells you that December is not off the table.”

Oil Down

Futures of crude oil, Canada’s largest export, fell 1.9% to $94.59, the lowest point since June. The discount Canadian producers face compared to U.S. crude benchmarks is $40, the most since January.

Canadian gross domestic product rose 0.3% to an annualized C$1.59 trillion, Statistics Canada said yesterday in Ottawa, beating the 0.1 median forecast in a Bloomberg economist survey.

Growth is on pace to quicken to about a 2.5% annualized pace this quarter according to economists at CIBC World Markets and TD Securities, the fastest since a 6.2% gain two years ago. That would be enough to reduce what the Bank of Canada last week called “significant” slack in the economy, which led policy makers to drop language about raising interest rates.

The Canadian dollar has gained 1.9% in the past week, making it the top performer among the 10-currencies Bloomberg Correlation Weighted Index, followed by the U.S. dollar.

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