TORONTO, Sept 25 (Reuters) - The Canadian dollar weakened to a four-month low against its U.S. counterpart on Thursday as the greenback posted broad-based gains and ahead of domestic GDP data that could guide expectations for additional Bank of Canada interest rate cuts.
The loonie was trading 0.3% lower at 1.3940 per U.S. dollar, or 71.74 U.S. cents, after touching its weakest intraday level since May 20 at 1.3943.
"We're seeing the (U.S.) dollar rally against pretty much everything at the moment," said Christian Lawrence, head of cross-asset strategy at Rabobank. "The move today is primarily on the back of the blockbuster GDP numbers and also the much better than expected weekly labor numbers."
The U.S. economy grew faster than previously estimated in the second quarter amid strong consumer spending and business investment. Momentum appears to have ebbed against the backdrop of lingering uncertainty from trade policy but the data could still restrain additional interest rate cuts from the Federal Reserve, driving the U.S. dollar (.DXY), higher against a basket of major currencies.
Canadian gross domestic product data for July, due on Friday, is expected to show that the economy grew by 0.1%.
"I'm still pretty bearish of the Canadian economy," Lawrence said. "The consumer has been under so much pressure when (interest) rates were higher, and yes rates have come down, but that relief is still going to take a little while to filter through."
The Bank of Canada will support economic growth while ensuring inflation remains well controlled, Governor Tiff Macklem said on Tuesday, speaking less than one week after the central bank cut interest rates for the first time since March.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 2.1 basis points at 3.227%, after earlier touching its highest level since September 9 at 3.245%.
Reporting by Fergal Smith; Editing by Alistair Bell
