Canadian dollar gains amid higher gold, little domestic economic data
TORONTO - The Canadian dollar ended Tuesday higher, as gold prices continued to climb.
The loonie gained 0.03 of a cent to 91.71 cents US.
August bullion gained $6.20 to US$1,260.10 an ounce. In other commodities, the July crude contract in New York fell six cents to US$104.35 a barrel while July copper was ahead a penny to US$3.05 a pound.
"The Canadian dollar is going to follow oil prices and natural gas prices," said Ian Nakamoto, a research director at firm 3MACS.
Investors are digesting news from China overnight that showed inflation rose to a five-month high of 2.5 per cent in May, driven by higher food prices.
The Chinese government reported that inflation is still is below the ruling Communist party's 3.5 per cent target for the year, leaving room for interest rate cuts or other measures to stimulate the slowing economy if needed. May inflation was up from the previous month's 1.8 per cent, boosted by a 4.1 per cent rise in food prices.
Chinese economic growth slowed to 7.4 per cent in the three months ended March 31 from the previous quarter's 7.7 per cent. Other indicators suggest growth might slow still further in the current quarter.
Equities markets have been optimistic about the global economy following the recent release of several economic indicators.
Last week, the European Central Bank announced that it was going to deal with the threat of deflation and give some lift to a tepid economic recovery in the eurozone by cutting its lending rate to 0.15 per cent from 0.25 per cent and dropping its overnight deposit rate to minus 0.1 per cent from zero.
The additional monetary stimulus from the ECB was welcomed news, as traders had been counting on the bank to take action to save the eurozone from falling into a deflationary spiral that would choke off growth.
Positive signs have also been emerging from other economies since last week, including stronger first quarter growth in Japan, an improvement in China's exports and a solid U.S. jobs report for May.
Indications that the U.S. economy is on a roll this quarter after a bumpy start to the year have also helped push American stock benchmarks higher for the past month.
Meanwhile, in Canada, a survey by international human resources firm Manpower Inc. suggests about 20 per cent of Canadian companies expect to add to their payrolls in the third quarter.
But when factoring in seasonal variants, Manpower says that figure falls to 10 per cent. Overall, four per cent of firms surveyed said they expected to shed workers in the July-September period.
Most of those surveyed, 74 per cent, said they planned on keeping staffing levels the same, while two per cent were unsure what their hiring would be like in the upcoming quarter.
The survey found that hiring intentions were most favourable in Western Canada, with employers there reporting the highest net employment outlook out of any region at 15 per cent.
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