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C$ edges higher vs U.S. dollar after Canada's GDP surges in June

Credit: REUTERS/MARK BLINCH

The Canadian dollar climbed to a fresh seven-month high against its U.S. counterpart on Friday, on pace for a fourth straight day of gains as the U.S. dollar remained broadly weak and after data showed a record surge in Canada's real gross domestic product in June.

By Saqib Iqbal Ahmed

Aug 28 (Reuters) - The Canadian dollar climbed to a fresh seven-month high against its U.S. counterpart on Friday, on pace for a fourth straight day of gains as the U.S. dollar remained broadly weak and after data showed a record surge in Canada's real gross domestic product in June.

The Canadian dollar CAD= was at 1.3094 to the greenback, or 76.37 U.S. cents, stronger than Thursday's close of 1.3123, or 76.20 U.S. cents.

Canada's real GDP surged by a record 6.5% in June, as the economy continued to claw back from steep declines in March and April, though economic activity still remained below pre-pandemic levels, Statistics Canada said on Friday.

Second quarter annualized growth meanwhile sank by a record 38.7%, Statistics Canada said in a preliminary estimate.

The June numbers were above analyst expectations of a rise of 5.6%, while the second quarter plunge was slightly less sharp than an expected decline of 39.6%.

"The second-quarter GDP data confirm that the lockdown caused an unprecedented record contraction of 38.7% annualized, but the larger-than-expected rise in GDP in June at least provides a strong handover to the third quarter and means that there will now be a record expansion," Stephen Brown, senior Canada economist at Capital Economics, said in a note.

The loonie is on track to finish the week up 0.6%, its fourth straight weekly gain. The price of oil, one of Canada's main exports, was nearly flat on the day but was on pace to end the week about 1.6% higher.

"With global risk sentiment improving and stability in oil prices, the Canadian dollar has performed well this week," said Joe Manimbo, senior market analyst at Western Union Business Solutions.

Canadian government bond prices were higher across the maturity curve. The two-year CA2YT=RR yield was at 0.281%, down from 0.297% late on Thursday, while the benchmark Canadian 10-year CA10YT=RR yield fell to 0.638% from 0.668%.

(Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky and Tom Brown)

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