By Commodity News Service Canada
Winnipeg, July 31 – The Canadian dollar erased early losses and turned higher on Thursday as economic growth figures for May came in better that expected, analysts say.
At 11:40 CDT Thursday morning, the loonie rose 0.18 of a cent to US$0.9191 or US$1 = C$1.0890 following two days of sharp losses as Statistics Canada reported that gross domestic product grew by 0.4 per cent during the May, better than the 0.3 per cent that economists had expected.
The report came in the wake of news that U.S. gross domestic product grew by an annual pace of four per cent in the second quarter, after contracting 2.1 per cent in the January to March period because of severe winter weather.
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The U.S. Federal Reserve wrapped up its two-day meeting on interest rates on Wednesday, and indicated that it will keep short-term interest rates low for “a considerable time” after it ends bond purchases, which will likely be in October. Economists generally expect the Fed to hike interest rates in mid-2015, however the stronger than expected economic growth has some traders concerned that the Fed could hike interest rates much sooner.
At midday on Thursday, the Toronto Stock Exchange was dropped 244.99 points to 15,279.83.
