TORONTO – The Canadian dollar closed slightly higher Thursday as Canada’s current account deficit improved slightly in the second quarter.
The loonie gained 0.07 of a cent to 92.19 cents US as Statistics Canada reported that the current account deficit edged down $200 million to $11.9 billion.
The decline reflected a slight increase in the deficit on trade in goods and services, which was more than offset by a lower deficit in investment income.
Meanwhile, other data showed the U.S. economy grew more than expected in the second quarter. The latest revision shows gross domestic product grew by 4.2 per cent, versus the original reading of four per cent. Economists had generally expected a dip to 3.8 per cent.
The showing was a huge improvement from the first quarter, when GDP in the U.S. contracted 2.1 per cent, largely because of severe winter weather.
Statistics Canada is expected to release the June reading on gross domestic product on Friday. Economists expect that Canadian GDP grew by 0.2 per cent in June, which would translate into annualized growth of 2.6 per cent.
And next Wednesday, the Bank of Canada releases its next decision on interest rates.
The dollar surged eight-tenths of a cent on Wednesday following the announcement that Burger King would buy Tim Hortons for $12.5 billion. The cash and stock deal will see Burger King majority shareholder 3G Capital own 51 per cent of a new company, which will be the world’s third-largest fast food restaurant company.
The loonie has been pushed higher in the past by big corporate deals. That’s because a foreign buyer acquiring a Canadian company needs Canadian dollars to close the deal, boosting demand for the loonie on financial markets.
Caution was the watchword on markets after a top Ukrainian official said that two columns of tanks and military vehicles rolled into southeastern Ukraine from Russia on Thursday after Grad missiles were fired at a border post and Ukraine’s overmatched border guards fled. And a senior NATO official said at least 1,000 Russian troops have poured into Ukraine with sophisticated equipment, leaving no doubt that the Russian military had invaded southeastern Ukraine.
Investors looking for safety pushed December bullion up $7 to US$1,290.40 an ounce.
October crude in New York moved up 67 cents to US$94.55 a barrel.
December copper was down five cents to US$3.15 a pound.