Loonie higher amid Canadian housing starts, key employment report on Friday
TORONTO - The Canadian dollar advanced Wednesday amid stronger than expected figures for Canadian housing starts and ahead of a key employment report on Friday.
The loonie gained 0.15 of a cent to 93.81 cents US.
Canada Mortgage and Housing Corp. says housing starts rose to a seasonally adjusted annual pace of 198,185 units in June, compared with 196,993 units in May.
The figures were stronger than the 190,000 units that analysts had been expecting. It is the third consecutive month where starts have hovered around the 200,000 range and another indication that the Canadian housing market is not yet headed towards a slowdown.
The housing starts report came as Royal LePage said Toronto, Vancouver and Calgary are the main driving forces behind increases in home prices nationally.
The real estate company said average prices for condos, detached bungalows and standard two-storey homes increased between 3.9 per cent and 5.2 per cent in the second quarter and are expected to go up steadily for the rest of the year.
The housing data will likely be overshadowed this week by the latest employment figures, due out on Friday. Economists expect Statistics Canada will report that about 24,000 jobs were created last month compared with 25,800 in May, with the jobless rate remaining unchanged at seven per cent.
Although all signs point to a steady recovery in the Canadian economy, portfolio manager Kash Pashootan said he believes the loonie is overvalued and should be in the high-80 cents US range.
However, he is not looking for the loonie to make any major moves amid still-present geopolitical tensions in Ukraine, Israel and Iraq.
"Right now the Canadian dollar is taking a pause," said Pashootan, vice-president at First Avenue Advisory in Ottawa, a Raymond James Company.
"It recognizes that those risks exist and those risks haven't significantly improved or deteriorated."
Meanwhile, commodity markets were mixed, as the August crude contract on the New York Mercantile Exchange plunged $1.11 to US$102.29 a barrel. August gold bullion was up $7.80 to US$1,324.30 an ounce and September copper was down a penny at US$3.25 a pound.
Pashootan said the international tensions have helped drive up the price of gold, but added that "those movements to the upside will be short-lived."
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