Canadian dollar edges higher amid weaker than expected housing report
TORONTO - The Canadian dollar closed higher Monday amid a weak housing report and strong Chinese export data.
The loonie was up 0.19 of a cent to 94.03 cents US as Canada Mortgage and Housing Corp. said that housing starts came in at an annualized rate of 192,235 units in November, a decrease from 198,161 in October. It was also less than the 195,000 reading that economists had expected.
Meanwhile, China posted its biggest trade surplus in almost five years, rising to US$33.8 billion from $31.1 billion the month before. Exports ran ahead 12.7 per cent from November last year, well ahead of October's 5.6 per cent growth.
Imports grew only by 5.3 per cent year-over-year amid tepid domestic demand.
Elsewhere in Asia, Japan slashed its estimate of economic growth for the July-September quarter. The worldâ€™s third-largest economy grew an annualized 1.1 per cent last quarter, less than half the pace of the previous quarter amid weaker than expected corporate investment. The initial estimate had put growth at 1.9 per cent.
It is a very light week for North American economic data after last week's flood that included strong U.S. manufacturing and housing reports, better than expected third-quarter economic growth and improving consumer confidence. The week was capped off by data showing stronger than expected job growth last month in both Canada and the U.S.
While the figures are a welcome sign that the American economic revival remains on track, it also raised concerns that the Federal Reserve is set to start winding up its asset buying program sooner than thought, perhaps as early as next week when Fed members meet.
In the U.S., traders will look at the retail sales report for November on Thursday for further reinforcement on whether the Federal Reserve thinks the economy is strong enough to start cutting back on its US$85 billion of monthly bond purchases.
Economists are looking for sales to have risen by 0.6 per cent during the month.
On the commodity markets, oil prices were lower following a string of gains last week amid data showing bigger than expected drawdowns in U.S. inventories. The January crude contract on the New York Mercantile Exchange edged 31 cents lower to US$97.34 a barrel.
March copper was one cent higher to US$3.25 a pound while February gold in New York added $5.20 to US$1,234.20 an ounce.
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