BUSINESS

Canadian dollar lower, greenback rises in wake of strong consumer, housing data

05/28/2013 08:40 EDT | Updated 07/28/2013 05:12 EDT
TORONTO - The Canadian dollar closed lower Tuesday as the American greenback gained strength in the wake of strong U.S. consumer and housing data.

The loonie off 0.54 a cent to 96.2 cents US after the U.S. Conference Board's consumer confidence index for May blew past expectations, coming in at a five-year high of 76.2, against the 72.3 reading that economists expected. The April reading was 68.1.

The data was scrutinized for how it might influence the Fed, which is undertaking its third round of aggressive bond-buying to help the economy.

Speculation that the U.S. central bank might scale back the program based on a recent improvement in some economic indicators has sparked jitters in stock markets and pushed the greenback higher.

Traders also took in further good news from the American housing sector.

The S&P/Case-Shiller home price index for March rose by 1.12 per cent, higher than the 0.9 per cent pace that had been expected. The gain translates to a 10.87 per cent year over year gain — the first double-digit increase in over six years.

Markets also looked ahead to the Bank of Canada's next interest rate announcement on Wednesday.

The central bank is widely expected to keep its key rate unchanged for some time to come. Traders will look to the bank's statement for indications on how the economy is expected to perform.

On Friday, markets will get Statistics Canada's reading on how the economy performed during the first quarter. The agency is expected to announce that gross domestic product rose by 0.1 per cent during March, adding up to an annualized rise of 2.2 per cent for the quarter.

Oil and copper prices advanced after being buffeted last week after a survey by HSBC Corp. showed a decline in China's manufacturing for May. An official report on factory production in the world’s second-largest economy will be released later in the week. The July crude contract on the New York Mercantile Exchange was up 86 cents to US$95.01 a barrel.

July copper was two cents higher to US$3.31 a pound. Bullion prices slipped with the June contract in New York down $7.70 to US$1,378.90 an ounce.