Canadian Dollar Recovers After GDP Data

The Canadian dollar edged up against its major rivals in European deals on Tuesday, trimming early losses, after data showed that the economy grew at a faster pace in June, following a decline in five consecutive months.

Data from Statistics Canada showed that real gross domestic product rose 0.5 percent in June. The increase in June was broad based, led by mining, quarrying, and oil and gas extraction and, to a lesser extent, wholesale trade, the finance and insurance sector as well as arts and entertainment.

This was up from forecasts for an increase of 0.2 percent, following a 0.2 percent decline in May.

Meanwhile, the decline in oil prices kept the currency's gains in check.

Crude for October delivery declined $1.99 to $47.21 a barrel.

The oil prices fell sharply, as weak Chinese manufacturing data for August reinforced concerns over the world's second-largest economy.

An official gauge of Chinese manufacturing activity slumped to a three-year low in August and Caixin's final August PMI number indicated that activity in China's vast factory sector shrank at its fastest pace in almost six-and-a-half years in the month, raising fears of a hard landing for the world's second largest economy.

The American Petroleum Institute will release weekly crude oil inventories report later in the day, while the Energy Information Administration will publish official crude inventories data tomorrow.

The loonie showed mixed performance in the previous session. While the loonie held steady against the greenback and the aussie, it fell against the yen and the euro.

The loonie bounced off to 91.37 against the yen, from its previous 5-day low of 90.39. The loonie is likely to challenge resistance around the 93.5 mark.

The loonie climbed to 0.9257 against the aussie, a level not seen since August 2013. On the upside, the loonie may possibly find resistance around the 0.90 level. At yesterday's close, the pair was valued at 0.9343.

The loonie recovered to 1.3117 against the greenback and 1.4754 against the euro, off its early lows of 1.3232 and 1.4962, respectively. If the loonie extends rise, it is likely to challenge resistance around 1.30 against the greenback and 1.46 against the euro.

Looking ahead, Markit's final U.S. manufacturing PMI for August, the Institute for Supply Management's manufacturing PMI for August and construction spending data for July are slated for release shortly.