Canadian Dollar Falls to 4-year Lows on Weak Data
The Canadian dollar continued its freefall Wednesday, hitting four-year lows against the US dollar amid weaker than forecasted data.
The loonie fell another 32 pips to 92.06 US after several economic indicators failed to live up to expectations. Canada’s New Housing Price Index stagnated in November after home prices rose 0.1 percent the prior month. Building permits fell at a rate of 6.7 percent in November, compared to expectations for a more moderate decline. Authorizations for new construction projects had risen 8 percent in October, according to Statistics Canada.
Housing starts reached 189,700 annually in December, compared to 197,800 the prior month. Economists expect the Canadian housing market to cool further this year. According to the latest survey from Royal LePage, house prices in Canada rose between 1.2 percent and 3.8 percent in the fourth quarter. The real estate company says it expects Canadian house prices to have risen 3.7 percent in 2013.
The US dollar resumed its bullish momentum after weekly jobless claims fell to the lowest level in a month, boosting expectations for a robust payrolls report on Friday. The ADP Institute estimates the US economy added 238,000 private payrolls in December. Official data courtesy of the Labor Department will probably be less optimistic.
The loonie’s decline could accentuate following the US nonfarm payrolls report on Friday. Canada, which will also release employment figures tomorrow, may benefit from a lower currency, according to Finance Minister Jim Flaherty. The Canadian dollar has shed more than 2 percent against the greenback in 2014.
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