BUSINESS

Canadian dollar rises as housing starts dip, IMF upgrades economic growth

07/09/2013 08:53 EDT | Updated 09/08/2013 05:12 EDT
TORONTO - The Canadian dollar closed higher Tuesday amid data showing that Canadian housing starts declined less than expected last month and that prospects for economic growth have improved.

The currency was ahead 0.3 of a cent at 95 cents US as Canada Mortgage and Housing Corporation said starts came in at an annualized rate of 199,586 units in June, a decrease from 204,616 in May.

That data was much better than the reading of 190,000 starts that analysts had been expecting.

June’s seasonally adjusted annual rate of urban starts increased in British Columbia, while decreasing in Atlantic Canada, Ontario, Quebec and the Prairies.

Also, the International Monetary Fund upgraded Canada’s growth expectations for this year to 1.7 per cent from 1.5 per cent, but warns that overall global conditions remain uneven, weak and perilous.

The IMF expects growth around the world will barely top three per cent this year, moderately lower than previously thought, and only start showing signs of life at 3.8 per cent in 2014.

Prices were mixed on commodity markets with August crude on the New York Mercantile Exchange ahead 39 cents to a 14-month high of US$103.53 a barrel amid rising tensions in Egypt.

Copper prices fell further on demand concerns, with the September contract down three cents to US$3.06 a pound.

Gold prices got some lift from data showing that China’s inflation rose in June but was well below the government’s target, a sign of weak demand amid an economic slowdown.

Consumer prices were up 2.7 per cent in June from a year earlier, higher than the 2.1 per cent inflation rate in May but below the 3.5 per cent official target for the year. The June figure was driven by a 4.9 per cent rise in food costs.

The August bullion contract in New York gained $11 to US$1,245.90. Gold is seen as a hedge against inflation.

There was also relief on markets after Greece secured a much-needed 6.8 billion euros in rescue loans Monday after squeaking by an inspection from its international creditors, who are demanding it slash government spending, including letting go thousands of civil servants.