Canadian Dollar Unable to Keep Momentum From Strong Data

The Canadian dollar is weakening on mixed data on Tuesday. The loonie has been unable to keep the momentum from last week’s stellar economic data, gradually paring its gains against the greenback on the year. The Canadian buck could further weaken over the summer as the central bank is unlikely to put forward an aggressive normalization strategy until at least after the federal election.

On the data front, according to the Canada Mortgage and Housing Corporation (CMHC), the seasonally adjusted annual rates of housing starts tumbled to 202,337 units in May, down from the previous month’s 233,410. However, Statistics Canada reported that building permits surged 14.7% in April, up from 2.8% in March. The market had projected a jump of just 3.5%.
The real estate industry will then home in on housing prices on Thursday. The market is penciling in a slight drop of about 0.1% for April.
Last week, it was reported that the Canadian economy added 27,700 jobs in May, which is much below the 106,500 jump in April. It did beat median estimates of just 8,000. The unemployment rate fell from 5.7% in April to 5.4% in May.
Inside the labor report, jobs fell for business services, accommodation and food services, and public administration. The biggest increases in employment were found in Ontario (21,000), Nova Scotia (21,000), British Columbia (4,500), and New Brunswick (400). The largest declines were situated in Newfoundland and Labrador (2,700) and Prince Edward Island (700).
Analysts noted that the record low jobless rate supports the Bank of Canada (BOC)’s view that the economy will rebound following a temporary slowdown. For now, the BOC is not expected to raise interest rates until at least after the election.
The loonie did benefit from higher energy prices. July West Texas Intermediate (WTI) crude oil futures rose $0.19, or 0.36%, to $53.45 per barrel. July natural gas futures were relatively flat at $2.36. Energy remains Canada’s top export, so any changes in prices would impact the national economy.
The USD/CAD currency pair edged up 0.12% to 1.3284, from an opening of 1.3270, at 15:31 GMT on Tuesday. The GBP/CAD surged 0.42% to 1.6902, from an opening of 1.6830.

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