The Canadian dollar closed lower Monday as traders digested results from the Bank of Canada’s latest survey on businesses optimism.
The loonie dipped 0.18 of a cent to end at 93.66 cents (U.S.).
According to the central bank’s summer outlook, executives gave generally positive responses across a number of questions but, in most cases, confidence levels dropped from the spring survey. Most also remained cautious on investment and hiring.
The bank’s analysis was that businesses have not materially changed expectations from the spring.
The survey is one of the ways the central bank gauges how the economy is faring. It relies on a summary of interviews conducted with senior management at about 100 Canadian firms on topics such as demand and capacity, and how they view future economic activity.
April’s survey showed that there were some signs of improvement for exporters, with businesses saying that they had a positive outlook based on a strengthening U.S. economy and a depreciation of the Canadian dollar.
The Canadian dollar is entering the second half of the year around the 94-cent level, close to its highest point for 2014 so far and much to the discomfort of the country’s exporters.
Those elevated levels could be tested Friday when Statistics Canada releases June employment data. The agency is expected to report that about 24,000 jobs were created last month compared with 25,800 in May, with the jobless rate remaining unchanged at 7 per cent.
Ian Nakamoto, director of research at 3MACS, said the loonie could fall if the figures do not come in as expected.
Analysts observe that the dollar’s rise from 89 cents earlier in the year is due to a number of reasons, including rising inflation, data suggesting the outlook for exporters is improving, a better American economic climate and rising oil prices.
“The net [Canadian dollar] position has shifted net positive for the first time since February, 2013, highlighting that finally sentiment towards [the loonie] has turned favourable,” said Camilla Sutton, chief foreign exchange strategist at Bank of Nova Scotia.
Meanwhile, commodity prices fell, with August crude oil 53 cents lower at $103.53 a barrel.
August gold bullion fell $3.60 to $1,317 an ounce while September copper lost 2 to $3.26 a pound.Report Typo/Error