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Canadian Dollar Holds 0.92 Amid US Data

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Canadian Dollar Holds 0.92 Amid US Data

The Canadian dollar’s gains eroded Tuesday amid a spate of upbeat economic data from the United States.

The loonie rose to an intraday high of 0.9231 US. It consolidated at 0.9202, declining 0.06 percent.

In economic data, US durable goods orders unexpectedly rose in April, underscoring a strong month of recovery following the first quarter slowdown. Orders for manufactured goods meant to last three years or more accelerated 0.8 percent in April, following a revised gain of 3.6 percent the prior month. Economists forecast a decline of up to 0.8 percent.

Orders for durables excluding transportation edged up 0.1 percent, following a revised gain of 2.9 percent the prior month.

Markit Group posted a stronger than forecast reading of the monthly US services PMI. Service providers in the world’s largest economy saw overall business rise at a marked pace in May, leading to the fastest pace of jobs growth since January.

A dearth of key data from Canada this week will keep the markets fixated on developments south of the border. The US government will report on pending home sales, personal consumption expenditures and revised gross domestic product on Thursday. The Commerce Department is widely expected to downwardly revise its GDP estimate to reflect contraction in the first quarter.

On Friday Statistics Canada will provide its initial estimate of first quarter GDP growth. Economists forecast the Canadian economy expanded 1.8 percent in the first three months of the year. Growth probably slowed at the tail end of the first quarter. Month-on-month, Canada’s GDP is forecast to have expanded just 0.1 percent in March, following a gain of 0.2 percent the prior month.

The loonie can test fresh highs Friday should the GDP report show strong improvement in the Canadian economy. Investors are still trying to piece together an outlook on the Canadian economy, but several months of fluctuating data has made that job more difficult.

As an example, Canada’s job growth nearly doubled forecasts in March, rising at a monthly rate of 42,900. In April, however, Canada’s economy lost 28,900 jobs, highlighting a prolonged period of volatility for the country’s labour market.

In January 29,400 jobs were created, following a decline of 44,000 in the final month of 2013.

Overall employment growth has been negligible since August 2013, Statistics Canada said in the March jobs report.

The Bank of Canada has suggested the country’s labour market is weaker than the numbers suggest. In its spring review the BOC said the fall in the unemployment rate likely exaggerated Canada’s labour market recovery. The central bank has also criticized Statistics Canada’s labour force survey – the data set used to gather employment information – and said it provided little benefit for Canadian job seekers.

Canada’s unemployment rate has fallen 1.8 percentage points since the height of the recession in August 2009.

Statistics Canada will release May employment data next Friday, the same day the Commerce Department reports on US nonfarm payrolls.

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