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Thursday, 6 March 2014
Canadian Dollar Advances to Two-Week High on Economic Prospects
By Ari AltstedterMar 6, 2014 8:21 AM PT
Canada’s currency strengthened beyond C$1.10 per U.S. dollar for the first time in more than two weeks as building permits climbed more than forecast, adding to signs the global economy is picking up.
The currency rose for a second day after the Bank of Canada kept its key interest rate unchanged yesterday and reiterated its next move depends on the progress of the economy. Global stocks gained as the European Central Bank raised growth forecasts. U.S. jobless-benefit claims fell to the lowest since November even as a harsh winter has weighed on other reports.
“Every piece of data we’re getting is confirming weather has impacted growth but it hasn’t derailed growth, and globally central banks aren’t really moving away from their stance, and the Bank of Canada holds a very neutral tone, not a dovish tone,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia, said by phone from Toronto. “All of that is very good for a pro-cyclical currency like the Canadian dollar.”
The loonie, as Canada’s currency is known for the image of the aquatic bird on the C$1 coin, gained 0.6 percent to C$1.0968 per U.S. dollar at 11:20 a.m. in Toronto and touched C$1.0956, the strongest since Feb. 19. It advanced beyond its 50-day moving average for the first time since October, a technical signal it may gain more. One loonie buys 91.17 U.S. cents.
The Canadian dollar dropped to C$1.1224 in January, the weakest since 2009, as investors bet on lower interest rates after the central bank said inflation would stay at almost the bottom of its 1 percent-to-3 percent target band this year and flagged the currency’s strength as a headwind to exports.
Yesterday’s policy statement made no mention of the currency and said the latest data on economic growth and inflation were stronger than expected.
The value of residential building permits granted last month jumped 26.3 percent to C$4.60 billion ($4.18 billion), Statistics Canada said. Non-residential permits fell 14.6 percent to C$2.39 billion, reducing the gain in total permits to C$6.99 billion, an 8.5 percent rise. Economists surveyed by Bloomberg forecast a 1.7 percent increase.
U.S. jobless claims declined by 26,000 to 323,000 last week, the Labor Department reported.