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Loonie Breaks 92 Cents

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Loonie Breaks 92 Cents

The Canadian dollar climbed higher Thursday, surpassing 92 US cents for the first time since the beginning of the year amid stronger than forecast housing data.

Canadian housing starts rebounded sharply in April, rising more than 24 percent to a seasonally adjusted annual pace of 194,800, Statistics Canada reported today. Economists forecast a gain to 175,000.

New house prices advanced 0.2 percent in March, following an identical release the prior month, StatsCan also reported. Year-on-year, the price of new Canadian homes was 1.6 percent higher.

In the United States, weekly jobless claims declined 26,000 to 319,000 for the week ended May 3, the Labor Department reported from Washington. The faster than forecast drop supports expectations the US labour market was strengthening despite a run-up in jobless claims at the end of April. US employers added 288,000 private payrolls in April, the Labor Department reported last week.

The Canadian dollar closed at a one-month high earlier this week, shrugging off mixed trade data. On Thursday the Canadian dollar surged more than 0.3 percent to 0.9206, the highest level since the beginning of January. The loonie fell short of 92 cents on April 10, climbing to a high of 0.9191.

The Canadian dollar has advanced more than 1 percent versus the greenback this week. The US dollar has been under pressure as the Federal Reserve continues to reduce the pace of monthly bond buying without a clear message regarding interest rates. Federal Reserve Chair Janet Yellen offered no clarification as to when the central bank may start lifting the benchmark lending rate in her Congressional testimony on Wednesday.

In other trading, the Canadian dollar surged against the euro, climbing nearly 0.7 percent to 0.6640 EUR.

The loonie’s biggest market mover of the week is yet to come. StatsCan on Friday will report on net change in employment for April. Economists expect the Canadian economy added between 12,000 and 20,000 jobs in April, following a gain of 42,900 the prior month. The unemployment rate is expected to have held steady at 6.9 percent.

The Canadian labour market has been sputtering since mid-2013. The impressive pace of March hiring came after a prolonged period of poor results. The Canadian economy added an average of 9,000 positions per month in the latter half of 2013.

Canadian employment data has been especially volatile in recent months. Employers shed 44,000 positions in December and added 29,400 in January. This was followed by a 7,000 decline in February.

A strong April reading will help lift the Canadian dollar to new monthly highs. The loonie has lost more than 3 percent versus the US dollar year-to-date. Over the past three months, however, the Canadian dollar has traded on a gain of more than 0.8 percent.

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