The loonie ended higher Monday, boosted by better-than-expected export data out of China.
The Canadian dollar closed with a 0.33-cent gain at 96.40 cents (U.S.).
Overnight, data showed that China’s exports accelerated while inflation edged lower last month, raising hopes that the country is gradually recovering from a painful slowdown.
It’s the latest sign that China is stabilizing after yearly growth fell to a two-decade low of 7.5 per cent in the second quarter.
The Chinese figures initially helped lift commodity prices but, by mid-day, the October crude contract on the New York Mercantile Exchange fell $1 to $109.53 a barrel. December gold bullion dipped 40 cents to $1,386.10 an ounce, while December copper saw an uptick of 2 cents to $3.28 a pound.
“The loonie is going to be highly correlated to the price of oil and other resources. As we’ve seen oil lift up a little bit, that has provided some support to the loonie in the near term,” said Craig Fehr, a Canadian markets strategist with Edward Jones in St. Louis.
“Broader, the loonie will approximate par over time but that’s going to bounce around again as we see fluctuations in commodity prices.”
Japanese shares also rallied thanks to Tokyo’s 2020 Olympics bid victory. The Summer Olympics are expected to provide a welcome boost, much of it in the construction sector, where the government is already spending heavily as part of its stimulus program.
Statistics Canada reported that contractors took out building permits worth $8-billion (Canadian) in July, up 20.7 per cent from June – the sixth gain in seven months.
The July increase came mainly from higher construction intentions for commercial buildings in Ontario, Alberta and Quebec.
In the non-residential sector, the total value of building permits rose 45.5 per cent to $3.9-billion in July, with Ontario, Quebec and Alberta accounting for most of the increase. Decreases in the non-residential sector were recorded in four provinces, led by New Brunswick.
Traders will also continue to look this week for clues on what the U.S. will do about the Syria situation. President Barack Obama is set to take his case Tuesday to Americans for punishing the Assad regime for an alleged sarin gas attack on civilians Aug. 21. A congressional vote on military action could come some time this week as lawmakers return from their summer break.
Oil prices will be affected if military action is taken in Syria, even though the country is not an oil exporter.
“It’s kind of a blueprint reaction from the markets. Syria is not an important player as it relates to oil exports but typically when you see some of these conflicts or issues arise in the Middle East, obviously it has implications for the flow of oil around the world,” Mr. Fehr said.
“We’re seeing some of that be reflected in oil prices because geopolitical threats tend to get reflected in the oil markets. But some of that can be temporary.”