The Canadian dollar closed lower Monday, ending a string of seven consecutive trading days of gains.
The loonie was fell 0.13 of a cent to end at 90.46 cents (U.S.) after rising a quarter of a cent Friday following a strong jobs report for January. The Canadian economy created 29,400 jobs, far higher than the 20,000 that economists had been expecting, while the unemployment rate slid to 7.0 per cent from 7.2 per cent.
The dollar also stepped back amid data out Monday showing a slowdown in the housing sector.
Canada Mortgage and Housing Corp. said housing starts for January came in at a seasonally adjusted pace of 180,248, down from 187,144 in December.
Traders are now looking to Tuesday when the federal government unveils its latest budget.
BMO Nesbitt Burns senior economist Benjamin Reitzes said markets aren’t expecting any big surprises in the document.
“The name of the game is ensuring 2015 sees a surplus, which appears to be easily attainable given forecasts for improving economic growth,” he said.
Traders will also take in the latest reading on manufacturing shipments later in the week.
And investors are looking ahead to comments before Congress by the new chair of the U.S. Federal Reserve, Janet Yellen. They’ll be looking for any sign in her remarks Tuesday that the Fed might alter plans to wind down its bond-buying stimulus program.
The Fed has cut its bond purchases by $20-billion to $65-billion a month and analysts have generally expected the Fed to continue to taper at $10-billion a meeting and wrap up the program in October.
The loonie had enjoyed a steady string of advances after the currency hit its worst levels in 4 1/2 years in late January.
Analysts have pointed to data showing the Canadian economy grew for a fifth successive month in November while markets have been pricing in a lower likelihood of the Bank of Canada cutting interest rates.
The loonie has also ridden a wave of optimism that the Keystone XL pipeline, which would transport oil sands crude from Alberta to refineries along the Texas Gulf Coast, will be approved. Such a move could give a boost to the energy sector.
On top of that, the International Monetary Fund expects the Canadian economy will grow 2.2 per cent this year, up from an estimated 1.7 per cent in 2013, as the U.S. continues to import rising volumes of oil from Canada.
On the commodity markets, March crude on the New York Mercantile Exchange edged 18 cents higher to $100.06 a barrel, its highest close this year.
March copper was 1 cent lower at $3.22 a pound while April gold rose $11.80 to $1,274.70 an ounce.