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Canadian dollar charges ahead as data shows economy put in solid showing in '13

A Canadian dollar coin, or loonie, and an American dollar sit in front of a scale in Quebec City, on April 7, 2010. THE CANADIAN PRESS/Jacques Boissinot

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A Canadian dollar coin, or loonie, and an American dollar sit in front of a scale in Quebec City, on April 7, 2010. THE CANADIAN PRESS/Jacques Boissinot

TORONTO - The Canadian dollar closed sharply higher Friday amid data showing the economy slowed more than expected in December but that overall growth last year still turned out to be the best since 2011.

The loonie ran up 1/2 a cent to 90.3 cents US.

Statistics Canada reported that fourth-quarter economic growth came in at an annualized pace of 2.9 per cent. That was better than the 2.5 per cent rise that had been expected. But gross domestic product contracted by 0.5 per cent in December, more than the expected 0.3 per cent drop.

Other data out of Ottawa showed that the federal budget was in the black in December as Ottawa recorded a $1.15-billion surplus. That compares with a $700-million deficit recorded in December 2012.

The government forecasts a $16.6-billion deficit for the 2013-14 fiscal year ending March 31, and the December figure is close to that track. For the nine months to December, the deficit was $12.7 billion.

In the U.S., the first revision to fourth quarter GDP showed that the economy grew at an annualized rate of 2.4 per cent, matching expectations but down sharply from the original 3.2 per cent reading.

By contrast, Statistics Canada raised its initial estimates for the first two quarters of 2013 and said the overall growth rate for the year was 2.0 per cent.

Meanwhile, the Chicago Purchasing Managers Index, a gauge of manufacturing activity in the American Midwest, showed stronger than expected expansion this month, coming in at 59.8, up from 59.6 in January.

And the University of Michigan's influential consumer confidence index came in at 81.6, up from 81.2 in January.

Investors are keeping an eye on the crisis in Ukraine following accusations by the country’s new interior minister, Arsen Avakov, that the Russian military is blocking a Ukrainian military airport in the Black Sea port of Sevastopol in Crimea.

IG market analyst Stan Sahmu said that while traders for now are focused on economic indicators, “the Ukraine situation seems to be escalating in the background and could haunt markets in coming weeks.”

On the commodity markets, the April crude contract on the New York Mercantile Exchange gained 19 cents to US$102.59 a barrel.

May copper was down a cent at US$3.19 a pound while April gold bullion dropped $10.20 to US$1,321.60 an ounce.

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