Loonie closes above parity, economic growth slightly better than expected

TORONTO – The Canadian dollar closed above parity with the U.S. dollar for the first time in a week amid data showing the Canadian economy performed better than expected in November.

The loonie was up 0.42 of a cent to 100.27 cents US after Statistics Canada reported gross domestic product grew by 0.3 per cent, better than the 0.2 per cent reading that had been expected. Year over year, GDP was ahead by 1.3 per cent.

The dollar had been closing below parity since last Wednesday, hitting a six-month low late last week, after the Bank of Canada said it would likely move to hike interest rates further down the road than previously thought because of weaker economic conditions.

The GDP figure came a day after data showed the American economy unexpectedly stalled in the fourth quarter.

American gross domestic product shrank by 0.1 per cent amid a plunge in defence spending and a 5.7 per cent drop in exports that analysts think was linked to hurricane Sandy. The recession in parts of the eurozone also hurt performance. Economists had expected growth of 1.1 per cent in the October-December period.

Commodities were lower with March crude down 45 cents to US$97.49 a barrel.

Copper dipped two cents to US$3.73 a pound after running ahead six cents on Wednesday. Gold bullion stepped back $19.60 to US$1,662 an ounce.

Traders also looked to another major piece of economic data coming out this week — the January non-farm payrolls report. Economists believe the American economy created about 153,000 jobs, roughly the same reading as December.

Canadian employment data for January comes out Feb. 8.