Loonie down as building permits decline, traders look to Yellen remarks
TORONTO - The Canadian dollar closed lower Wednesday amid data showing an unexpected slowdown in the building sector.
The loonie was off 0.13 of a cent to 91.79 cents US after jumping almost two-thirds of a US cent Tuesday to a one-month high in the wake of a sharp revision upwards in the February trade surplus.
Statistics Canada reported that contractors took out $6 billion worth of building permits in March, down three per cent from February and a sizable miss from the 3.5 per cent gain that economists had expected. The March decline followed an 11.3 per cent decrease the previous month.
The agency added that lower construction intentions in the non-residential sector in six provinces, led by Ontario, more than offset a gain in the residential sector.
CMHC will release its reading on housing starts for April on Thursday.
Traders also looked ahead to key employment data coming out at the end of the week and remarks from U.S. Federal Reserve chairwoman Janet Yellen.
She told a Senate panel that the U.S. economy is improving but notes that the job market remains â€œfar from satisfactoryâ€ and inflation below the Fedâ€™s target rate.
Yellen said that she expects low borrowing rates will continue to be needed for a "considerable time." At the same time, Yellen said geopolitical tensions, a renewal of financial stress in emerging markets and a faltering housing recovery are potential threats.
On Friday, Statistics Canada is expected to report that the economy created about 16,000 jobs in April, down from 43,000 in March. But job creation has been volatile and has regularly missed expectations.
Markets also digested some disappointing German data.
Factory orders plunged unexpectedly in March as demand slumped both at home and abroad, particularly from other countries using the euro, and the German government cautioned that the crisis in Ukraine could contribute to further weakness.
Industrial orders dropped 2.8 per cent from February, the largest month-on-month fall since November 2012. Economists had predicted a 0.3 per cent rise.
On the commodity markets, June crude on the New York Mercantile Exchange gained $1.27 to US$100.77 a barrel.
July copper slipped two cents to US$3.03 a pound while June gold bullion faded $19.70 to US$1,297.80 an ounce.
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