Canadian dollar tumbles, data suggests U.S. housing rebound, weak inflation
TORONTO - The Canadian dollar fell almost half a U.S. cent Tuesday as the greenback appreciated in the wake of data showing weak inflation in the United States and other reports pointing to a rebound in the American housing sector.
The loonie closed down 0.48 of a cent at 91.38 cents US as U.S. consumer prices rose in July at the slowest pace in five months, held back by a drop in gasoline prices.
The U.S. Labor Department says consumer prices edged up a seasonally adjusted 0.1 per cent last month, which met expectations.
Over the past 12 months, consumer inflation has gone up two per cent, meeting a target set by the Federal Reserve, while inflation excluding food and energy is up 1.9 per cent.
The latest read on inflation came ahead of the release Wednesday of the minutes from the latest Fed interest rate meeting. Then, on Friday, Fed chairwoman Janet Yellen delivers the keynote address at the central bank's annual meeting in Jackson Hole, Wyo.
Yellen is expected to again signal to the market that the central bank is in no rush to hike rates and when it does, the pace will be gradual.
Meanwhile, there was also further indication of a rebound in the U.S. housing sector as home construction jumped 15.7 per cent in July to an annualized rate of 1.09 million, the fastest pace in eight months.
That came on the heels of a strong builders sentiment survey released on Monday. And home improvement retailer Home Depot also reported a strong recent quarter with earnings up 14 per cent.
A calmer geopolitical backdrop seemed to also support markets Tuesday.
Russian Foreign Minister Sergey Lavrov said issues related to sending a humanitarian convoy to Ukraine were resolved following weekend talks in Berlin with his counterparts from Ukraine, Germany and France. Germany's Frank-Walter Steinmeier reported progress on "some issues," though Lavrov said there was no decision on establishing a ceasefire between the government and pro-Russian rebels.
Prices were lower on the commodity markets where September crude on the Nymex declined $1.93 to a seven-month low of US$94.48 a barrel. Prices have plunged 10 per cent in the past month as it has become less likely that Islamic State insurgents would seriously impede Iraqi oil production.
September copper was down two cents at US$3.09 a pound and December bullion fell $2.60 to US$1,296.70 and ounce.
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