BUSINESS

Loonie lower as data on US housing sector creates some optimism on US economy

04/26/2012 09:22 EDT | Updated 06/26/2012 05:12 EDT
TORONTO - The Canadian dollar was slightly lower Thursday as data on the housing market south of the border showed some positive signs for the U.S. economy.

The loonie moved down 0.05 of a cent to 101.63 cents US, with commodities prices higher.

The TSX oil and gas sector rose 1.3 per cent as oil prices closed higher with the June crude contract on the New York Mercantile Exchange up 43 cents to US$104.55 a barrel.

Gold bullion prices increased $18.20 to US$1,660.50 an ounce.

A report by the National Association of Realtors measuring the number of people who have signed contracts for home purchases in the U.S. rose to its highest level in nearly two years.

The positive sign for the economy followed a statement from the U.S. Federal Reserve on Wednesday, after its two-day policy meeting, that did not mention any new steps to help the economy. But chairman Ben Bernanke said that more bond purchases to help the economy remain "very much on the table."

Elsewhere, economists believe that the Bank of Japan will modestly increase its bond-buying program Friday. It would be the second time this year that the central bank has bought more government bonds to boost the economy. The dollar fell to 80.95 Japanese yen late Thursday from 81.29 yen Wednesday.

In Europe, the market responded cautiously to evidence of a sharp slowdown in the economy of the 17 countries that use the euro.

Adding to the gloom was a survey from the European Commission showing economic sentiment in the eurozone was down more than expected. Its main indicator fell from 94.5 to 92.8, much worse than consensus expectations for a more modest decline to 94.

In recent weeks, there has been an increasing backlash against the austerity drive in many European countries amid worries that governments will be unable to deliver their debt-reduction plans as their economies tank.