The Canadian dollar closed higher Thursday amid mixed data on whether the U.S. economic recovery remains on track.
The loonie gained 0.43 of a cent to end at 90.65 cents (U.S.).
The Commerce Department says the U.S. economy grew at a 2.6 per cent annual rate from October to December, slightly more than previously estimated, as consumer spending rose at the fastest pace in three years. Analysts had been expecting a growth rate of 2.4 per cent.
The release coincided with figures from the U.S. Labour Department that found jobless claims fell 10,000 last week to a seasonally adjusted 311,000, the lowest since late November and a hopeful sign that hiring could pick up.
Despite that encouraging data, however, the number of Americans who signed contracts to buy homes fell for the eighth straight month in February, indicating that real estate sales will likely slow over the next few months.
Last week, the loonie was pressured after the U.S. Federal Reserve said it could start raising short-term interest rates as soon as next year.
“With the Fed shifting away from its dovish tone it suggests a strong U.S. economic backdrop and therefore an improved global growth outlook, which has supported all the global growth assets,” Camilla Sutton, chief currency strategist for Bank of Nova Scotia, said in a note Thursday.
Sutton said there’s a potential that a weaker Canadian dollar will persist if Bank of Canada Governor Stephen Poloz lags the U.S. in making similar policy changes, which is what is expected to happen unless there are greater signs of a strengthening economy north of the border.
In another note, Scotiabank said it anticipates the Canadian currency will remain weak through mid-year before stabilizing by the end of the 2014 at about 89 cents if the U.S. economy continues to improve. However, it expects the loonie to weaken further to 88 cents in 2015.
“The Canadian domestic backdrop is uneven, with expectations of an improvement in net exports and business investment slow to materialize, adding to well-established concerns over general economic slack,” the note said.
Meanwhile, commodities were mixed as May crude on the New York Mercantile Exchange climbed $1.01 to $101.28 a barrel. June gold bullion fell $8.60 to $1,294.80 an ounce while May copper gained 3 cents to $2.99 a pound.Report Typo/Error