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Canadian dollar coins displayed on a map of North America. (Paul Chiasson/The Canadian Press)
Canadian dollar coins displayed on a map of North America. (Paul Chiasson/The Canadian Press)

Loonie closes with a solid gain amid strong housing starts data Add to ...

The Canadian dollar closed higher Monday amid strong domestic housing data and a greater willingness to take on risk, even as traders kept a close watch on geopolitical flashpoints.

“A volatile global environment, with some easing in concern over Ukraine offset by an escalation in Iraq, is being watched carefully by markets,” observed Camilla Sutton, chief foreign exchange strategist at Bank of Nova Scotia.

The loonie was closed up 0.43 of a cent at 91.58 cents (U.S.) as Canada Mortgage and Housing Corp. reported that housing starts during July came in at an annualized rate of 200,098, up slightly from 198,665 in June.

The currency tumbled over four-tenths of a cent Friday in the wake of a huge miss in July employment data. Only 200 jobs were created last month, a far cry from the estimated 20,000 positions that economists had expected.

On Monday, traders felt more inclined to take on risk after Russia called an end to military exercises near Ukraine on Friday and withdrew troops to their bases.

The Ukraine government announced Monday that the Red Cross will lead an international humanitarian aid operation into Ukraine’s conflict-stricken province of Luhansk with assistance from Russia, the European Union and the United States.

Such initiatives have previously faced sustained opposition from Ukraine and the West, who had feared they could act as a pretext for sending Russian troops into rebel-held territory.

There have also been worries about the effect of sanctions against Russia and countersanctions, which could seriously damage a still fragile economic recovery in Europe.

Meanwhile, in Iraq, U.S. warplanes attacked Islamic State militants near the northern city of Irbil, capital of the Kurdish region, in hopes of limiting their advance and keeping them away from oil fields.

In China, that country’s consumer price index in July stayed at 2.3 per cent, well below the official target for the year of 3.5 per cent. That gives the Chinese central bank room to ease access to credit if needed to shore up economic growth, which was 7.5 per cent in the latest quarter.

On the economic front, there are two other major Canadian pieces of data coming out this week. The new housing price index is released Thursday while the latest read on manufacturing shipments for June is out Friday.

In the U.S., the major report for the week is July retail sales on Wednesday.

On the commodity markets, September crude on the New York Mercantile Exchange gained 43 cents to $98.08 a barrel.

The positive news from China failed to lift metal prices and September copper was unchanged at $3.17 a pound, while the increased appetite for risk pushed December gold down 50 cents to $1,310.50 an ounce.

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