The Canadian dollar was unchanged on Thursday against its U.S. counterpart as Bank of Canada Governor Stephen Poloz’s upbeat tone on the economy helped to offset lower oil prices.
Poloz said he is comforted by recent signs of economic strength even as the central bank warned that rising consumer debt levels and an unbalanced housing market have raised household vulnerabilities.
“It seems as if the market is still having a hard time coming to grips with a tone that seems to be more constructive,” said Jimmy Jean, senior economist at Desjardins.
He expects the market to more “aggressively” price in interest rate hikes as inflation moves higher.
At 4 p.m. EDT, the Canadian dollar was trading unchanged at $1.3508 to the greenback, or 74.03 U.S. cents.
The steady profile for the currency came ahead of Canada’s employment report for May due out on Friday.
Prices of oil, one of Canada’s major exports, fell again on Thursday, with a sell-off continuing the day after data showed a surprise surge in U.S. crude inventories.
U.S. crude prices settled 8 cents lower at $45.64 a barrel.
The U.S. dollar held onto gains against a basket of currencies as investors took stock of former FBI Director James Comey’s testimony to the U.S. Senate, while the euro weakened after the European Central Bank kept interest rates on hold.
Canadian housing starts dipped in May as construction intentions fell in Toronto, another sign that one of the country’s hottest real estate markets might be cooling down.
Separately, Statistics Canada said new housing prices jumped by 0.8 per cent in April from March, the biggest gain in almost a year, amid keen buyer interest in Toronto and Vancouver.
Canadian government bond prices were slightly lower across the yield curve, with the two-year down 0.5 Canadian cent to yield 0.718 per cent and the 10-year falling 8 Canadian cents to yield 1.418 per cent.
On Tuesday, the 10-year yield hit its lowest intraday in nearly seven months at 1.373 per cent.Report Typo/Error