07/08/2013 08:57 EDT | Updated 09/07/2013 05:12 EDT

Canadian dollar higher amid strong housing data, rising metal prices

TORONTO - The Canadian dollar closed higher Monday amid data showing surprising strength in the Canadian housing sector in May and a survey showing that Canadian companies remain cautious on investment and hiring.

The commodity-sensitive loonie also benefited from rising metal prices, and was up 0.07 of a cent to 94.7 cents US.

Statistics Canada reported that building permits worth $7.3 billion were issued in May, up 4.5 per cent from April. Economists had expected a drop in the neighbourhood of 10 per cent.

The increase in May came mainly from the residential sector in Ontario and the non-residential sector in Quebec.

Meanwhile, the Bank of Canada’s latest survey of business intentions suggests Canadian companies are uncertain about the pace of the economic recovery. And the survey of 100 firms indicates corporate Canada is pulling back on their investment plans and keeping hiring modest.

The Bank of Canada itself has called on business to invest more in order to be in position to take advantage of the global economic recovery when it comes. But the survey suggests that executives appear to be saying the expansion must come first.

Commodity prices were mixed with copper prices inching up three cents to US$3.10 a pound after sliding 11 cents on Friday.

Gold prices also headed higher amid a sign that the recent steep price drop may be coming to an end. The August bullion contract on the Nymex rose $22.20 to US$1,234.90 an ounce after strategists at Deutsche Bank said much of gold's correction may have already happened.

Prices have been particularly under pressure since late May when U.S. Federal Reserve chairman Ben Bernanke suggested that the central bank could taper its program of $85 billion a month in bond purchases. Gold now is down more than 30 per cent from a peak of around US$1,900 an ounce in September 2011.

Oil prices were lower after little changed after unrest in Egypt helped push the price of crude up seven per cent last week. The August crude contract on the New York Mercantile Exchange declined eight cents to US$103.14 a barrel.

The Canadian dollar fell about half a US cent last week, with most of the loss occurring Friday after U.S. job creation figures for June blew past expectations and pushed the greenback higher.

Like gold, the loonie has been under pressure since late May as a result of Bernanke's remarks on tapering, which had the effect of pushing the greenback and bond yields higher. The benchmark U.S. 10-year Treasury has jumped to around 2.65 per cent, up about a full percentage point from May.

However, economists believe that the weakness in the Canadian currency is probably temporary.

CIBC World Markets chief economist Avery Shenfeld observed Monday in a commentary that "the U.S. growth required to turn the Fed will support Canada’s trade balance, a positive for the loonie come 2014."

He said that markets should "look for a rally back to near-parity on stronger global growth come 2014."