The Canadian dollar closed higher Monday amid data showing surprising strength in the Canadian housing sector in May and a survey showing that Canadian companies remain cautious on investment and hiring.
The commodity-sensitive loonie also benefited from rising metal prices, and ended up 0.07 of a cent to 94.7 cents (U.S.).
Statistics Canada reported that building permits worth $7.3-billion were issued in May, up 4.5 per cent from April. Economists had expected a drop in the neighbourhood of 10 per cent.
The increase in May came mainly from the residential sector in Ontario and the non-residential sector in Quebec.
Meanwhile, the Bank of Canada’s latest survey of business intentions suggests Canadian companies are uncertain about the pace of the economic recovery. And the survey of 100 firms indicates Corporate Canada is pulling back on their investment plans and keeping hiring modest.
The Bank of Canada itself has called on business to invest more in order to be in position to take advantage of the global economic recovery when it comes. But the survey suggests that executives appear to be saying the expansion must come first.
Commodity prices were mixed with copper prices inching up 3 cents to $3.10 a pound after sliding 11 cents on Friday.
Gold prices also headed higher amid a sign that the recent steep price drop may be coming to an end. The August bullion contract on the New York Mercantile Exchange rose $22.20 to $1,234.90 an ounce after strategists at Deutsche Bank said much of gold’s correction may have already happened.
Prices have been particularly under pressure since late May when U.S. Federal Reserve chairman Ben Bernanke suggested that the central bank could taper its program of $85-billion a month in bond purchases. Gold now is down more than 30 per cent from a peak of around $1,900 an ounce in September, 2011.
Oil prices were lower after unrest in Egypt helped push the price of crude up 7 per cent last week. The August crude contract on the Nymex declined 8 cents to $103.14 a barrel.
The Canadian dollar fell about half a cent last week, with most of the loss occurring Friday after U.S. job creation figures for June blew past expectations and pushed the greenback higher.
However, economists believe that the weakness in the Canadian currency is probably temporary.
CIBC World Markets chief economist Avery Shenfeld observed Monday in a commentary that markets should “look for a rally back to near-parity on stronger global growth come 2014.”
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