The Canadian dollar strengthened to a six-week high on Tuesday, driven by a rally in crude oil prices and strong housing data. The Canadian economy, which has been anemic for much of 2019, has enjoyed a string of positive economic reports lately, impressing investors at a time of global volatility. This is good news for the incumbent government with an election about a month away.
According to the Canadian dollar, August housing starts climbed 1.9% to 226,600, up from 222,500 in the previous month. This figure beats the market consensus of 215,000. Housing starts have topped 200,000 in five of the eight months in 2019.
Statistics Canada is also reporting that the value of July building permits rose 3% from the same time a year ago to $8.3 billion. Although this is down from the $9.4 billion peak in April, they are up from the 3.1% decline in June.
Last week, domestic markets were celebrating on news that the country added 81,000 jobs last month. This came after the previous weekâs report showing that the gross domestic product (GDP) expanded at an annualized pace of 3.7% in the second quarter, despite global uncertainty.
The Bank of China (BOC) maintained a rosy view on the national economy as it left interest rates unchanged. The odds of the central bank cutting rates at its October policy meeting have cratered from 70% to less than 20%.
Meanwhile, the loonie is gaining on higher energy prices as October West Texas Intermediate (WTI) crude oil futures jumped $0.70, or 1.21%, to $58.55 per barrel on the New York Mercantile Exchange. November natural gas futures edged up $0.01, or 0.3%, to $2.60 per million British thermal units (btu).
Year-to-date, the Canadian dollar has advanced 3.7%, making the loonie the best-performing currency in the top 10 economies.
The USD/CAD currency pair tumbled 0.2% to 1.3145, from an opening of 1.3169, at 15:36 GMT on Tuesday. The EUR/CAD fell 0.19% to 1.4520, from an opening of 1.4547.
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