BUSINESS

Canadian dollar closes up amid string of strong U.S. data; commodities mixed

06/27/2013 09:10 EDT | Updated 08/27/2013 05:12 EDT
TORONTO - The Canadian dollar inched higher Thursday in the wake of a string of strong economic reports and mixed commodity prices.

Traders also looked ahead to the latest reading on Canadian economic growth, which is being released Friday morning.

The loonie was up 0.04 of a cent to 95.47 cents US.

The U.S. Commerce Department said Thursday that American consumer spending rose 0.3 per cent last month. That made up for a 0.3 per cent decline in April, which was the biggest drop since the fall of 2009. And incomes rose 0.5 per cent in May, the biggest gain since February and much better than the 0.1 per cent April increase.

The number of Americans seeking unemployment benefits fell 9,000 to a seasonally adjusted 346,000. The four-week average, a less volatile figure, declined 2,750 to a near five-year low of 345,750. Applications are a proxy for layoffs.

Also, the number of people who signed contracts to buy U.S. homes jumped in May to the highest level in more than six years. The increase points to healthy gains in home sales in the coming months. There is generally a one- to two-month lag between a signed contract and a completed sale.

Meanwhile, economists believe the Canadian economy grew 0.1 per cent month over month and at an annualized rate of 1.4 per cent, which is slower than the U.S.

Data released Wednesday showed the U.S. economy grew at only a 1.8 per cent annualized rate in the first quarter, instead of the previously estimated 2.4 per cent.

The slower-than-expected growth raised hopes that the U.S. Federal Reserve is in no hurry to cut back a key stimulus program, the monthly purchase of US$85 billion of bonds aimed at keeping long-term rates low.

The mood on markets also improved Thursday as interbank lending rates in China continued to ease after a pledge earlier in the week by authorities to shore up banks facing cash shortfalls.

Fears of a credit crisis in the world’s second-biggest economy had contributed to a sell-off in global markets that ended when policy-makers in China softened their stance with a promise to provide "liquidity support" if needed.

Commodity prices improved Thursday with the August crude contract on the New York Mercantile Exchange up $1.55 to US$97.05 a barrel.

Gold prices slipped further with the August contract on the Nymex down $18.20 to US$1,211.60 an ounce. Gold prices have deteriorated steadily this year as the precious metal loses its appeal as a hedge against inflation and deteriorating currencies.

July copper climbed two cents to US$3.06 a pound.