Forex News – Canada’s GDP up in December, loonie unchanged

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Canada’s monthly gross domestic product rose by 0.4 percent in December, more than the 0.3 percent that was expected, while rebounding from November’s 0.1 percent drop.

Statistics Canada reported that Canada’s economic growth slowed markedly in the fourth quarter of 2011. Fourth-quarter gross domestic product rose by 1.8 percent, lower than an upwardly revised third quarter growth. However Q4 growth was in line with expectations .

A main factor was government stimulus winding down.  Also, the increase in exports, housing investment and business inventories were much weaker than in the third quarter, and government capital spending fell by 5.1 percent.

Some analysts suggest that weakness in the fourth quarter was transitory and we’re already seeing indications by the end of the quarter that weakness was reversing. The focus should be on the December number because it gives us an indication of what the handoff is into 2012.

The Canadian dollar hardly reacted to the GDP data, remaining under pressure by a broadly stronger U.S. dollar today. But the loonie is not far from a five-month high against the greenback, that was hit on Thursday, when CAD$1 bought USD$1.0162.