News Column

Canadian dollar declines, American currency gains ground amid mixed data

February 5, 2014

By Malcolm Morrison TORONTO _ The Canadian dollar shed early gains to move slightly lower as the U.S. currency strengthened amid a mixed bag of economic data. The loonie slipped 0.11 of a cent to 90.13 cents U.S. following four days of gains. The focus now is on the January jobs report, which comes out on Friday. Economists estimate the Canadian economy created about 20,000 jobs after the economy shed 44,000 jobs in December. But ahead of that data and the release at the end of the week of the U.S. government's jobs report, payroll firm ADP reported that the private sector created 175,000 jobs during January, about 15,000 short of what was forecast. Economists have been expecting that it would show that 190,000 jobs were added. Also, the Institute for Supply Management said its non-manufacturing index showed rising expansion during January, coming in at 54, up a full point from December. The loonie had advanced for the past four sessions after the currency hit its worst levels in 4 1/2 years late last week. Analysts point to data out at the end of last week showing the Canadian economy grew for a fifth straight month during November, up 0.2 per cent. Also, Scotiabank noted the markets are now pricing in a 16 per cent probability of an interest rate cut over the next 12 months, well off a 38 per cent probability on Jan. 10 . The loonie has also ridden a wave of optimism after a report from the U.S. State Department last week raised expectations that the Keystone XL pipeline, which would transport oilsands crude from Alberta to refineries along the Texas Gulf Coast , will be approved. Such a move could give a boost to the energy sector. On top of that, the International Monetary Fund expects the Canadian economy will grow 2.2 per cent this year, up from an estimated 1.7 per cent in 2013 as the U.S. continues to import rising volumes of oil from Canada . Other data out Wednesday showed a softening in the Canadian housing sector. Statistics Canada says the value of building permits issued by municipalities declined 4.1 per cent to $6.5 billion in December, following a 6.6 per cent decrease in November. The agency says the value of building permits for 2013 as a whole edged down 0.1 per cent from 2012 to $80.8 billion . On the commodity markets, the March crude oil contract in New York slipped four cents to US$97.15 a barrel. The March copper contract was unchanged at US$3.19 a pound while April gold bullion futures gained $6.20 to US$1,257.40 an ounce.


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Source: Canadian Press DataFile


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