Loonie notches up gains as Canadian exporters more optimistic about business prospects
The Canadian dollar moved higher against its US counterpart Thursday amid signs Canadian exporters were growing more optimistic about their international market.
The loonie reached an intraday high of 0.9251 before consolidating at 0.9233, advancing 0.07 percent. By the end of Thursday’s European session the Canadian dollar was on pace for a weekly gain of 0.25 percent.
Canadian exporters are more confident about business prospects now than they were during the pre-recession boom of 2003-2006, Export Development Canada reported today in Ottawa.
The semi-annual Trade Confidence Index, which measures business optimism among Canadian exporters and investors, advanced 1.8 points to 77.2.
The 2014 spring edition of the TCI marked the third consecutive increase since fall 2012.
The majority of exporters expect sales to increase over the next six months, EDC data showed. Forty-three percent of exporters who trade with the US said orders from the world’s largest economy have increased in the past six months. An improving US economy and a weaker Canadian dollar were cited as the biggest reasons for the rise in confidence.
Fifty-eight percent of exporters said a lower Canadian dollar had a positive impact on export sales. The dollar averaged 90 cents US during the survey period.
The Canadian dollar has depreciated by nearly 6 percent against its US counterpart in the last 12 months.
Exporters were less optimistic about domestic economic conditions, the EDC found. Less than a quarter of respondents said they expect domestic conditions to improve over the next six months.
The Canadian economy has struggled with consistency since 2013. Canada’s gross domestic product, expanded just 1.1 percent annually in the first quarter, as severe weather weighed on economic activity. Jobs growth, according to Statistics Canada, has been negligible since last August.
More than one-third of exporters said they expect hiring to increase in the next six months. Nearly three-quarters said their company experienced challenges finding skilled labour.
StatsCan will close out the week with reports on retail sales and consumer prices.
Canadian retail sales are forecast to have risen 0.5 percent in April, following a 0.1 percent decline the previous month.
Consumer prices are forecast to have risen 2.1 percent in May, following an increase of 2 percent that was the highest in two years.
The outlook on the world economy remained consistent. About one-third of exporters said a stronger US economy was their main reason for expecting improved global conditions in the next six months.
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