Loonie Follows Crude Oil in Decline, Ignoring Increase in Building Permits

The Canadian dollar fell against its most-traded peers today (though not against the surprisingly soft euro) even after a report revealed that Canadian building permits climbed by more than two times the forecast amount in December. The likely reason for the drop was the decline of crude oil prices.

Statistics Canada reported that the number of building permits climbed by 4.8% in December compared to 2.1% predicted by analysts. The increase followed the drop by 7.3% in the preceding month.

Data released on Tuesday was far less favorable as the trade balance widened from C$2.7 billion to C$3.2 billion in December instead of shrinking to C$2.3 billion as analysts had predicted. The Ivey PMI dropped from 60.4 in December to 55.2 in January, whereas experts had promised an increase to 60.7.

Prices for crude tanked after the US Energy Information Administration released its weekly supply report. While US stockpiles of crude rose less than was expected, US production climbed to a record high, threatening to disrupt the supply-demand balance on the energy market.

USD/CAD rallied from 1.2509 to 1.2568 as of 23:09 GMT today. EUR/CAD declined from 1.5484 to 1.5403. CAD/JPY slumped from 87.57 to 86.99.

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