Loonie Improves On Canadian GDP

 | Jul 31, 2014 11:57AM ET

USD/CAD has dipped below the 1.09 level in Thursday's North American session, as the Canadian dollar has halted its recent slide. The loonie received some much-needed help as Canadian GDP beat the estimate and posted a 0.4% gain in June. South of the border, US Unemployment Claims softened, coming in at 302 thousand.

The Canadian dollar has had a rough week, as USD/CAD climbed above the 1.09 for the first time since mid-June. The loonie has showed some life on Thursday, courtesy of unexpected positive news from Canadian GDP. The key indicator rose 0.4% in June, edging above the estimate of 0.3%. Canadian GDP is released on a monthly, rather than quarterly basis, and this was the indicator's best showing since February.

US Unemployment Claims rose last week, hitting 302 thousand. This was within expectations, as the estimate stood at 303 thousand. We'll get another look at key employment data on Friday, as the US releases Nonfarm Payrolls and the unemployment rate. Earlier in the week, ADP Nonfarm Payrolls softened, and the markets are bracing for a weak reading from the Friday NFP release, which could push the dollar down against its major rivals.

In the US, GDP soared in Q2, posting a gain of 4.0%. This easily beat the estimate of 3.1%. The surge in economic activity was boosted by strong consumer confidence and business activity in Q2. Meanwhile, ADP Nonfarm Payrolls was unable to keep pace. The key employment indicator dropped to 218 thousand, compared to 284 thousand a month earlier. This was well off the estimate of 234 thousand. If the official Nonfarm Payrolls follows suit with a weak reading, the US dollar could give up its recent gains.