Loonie higher amid rising commodities
A Canadian dollar, left, and a Euro are seen next to a series of U.S. dollars in this January 26, 2011 photo in Montreal. THE CANADIAN PRESS/Paul Chiasson
TORONTO - The Canadian dollar closed higher Thursday amid rising prices for oil and metals and positive U.S. economic data.
The loonie shook off early losses to gain 0.04 of a cent to 101.45 cents US as weekly applications for U.S. unemployment benefits hit a five-year low and U.S. home construction surged in December to the highest level in 4 1/2 years.
The U.S. Commerce Department said housing starts came in at a seasonally adjusted annual rate of 954,000 last month. It was the fastest pace since the summer of 2008, near the beginning of a major U.S. downturn that has been deeper and longer than the relatively brief disruption in Canada in 2008-2009.
The United States is also showing an improved job situation. The U.S. Labour Department reported Thursday that the number of Americans seeking unemployment aid fell to a five-year low last week.
Weekly unemployment benefit applications fell 37,000 to a seasonally adjusted 335,000. The four-week average, a less volatile measure, fell to 359,250.
Other data indicated the pace of foreign investment in Canada slowed late last year.
Statistics Canada reported that foreign investment in Canadian securities came in at $5.6 billion in November, which was the lowest amount since July. Foreign investment in the Canadian money market was $3.8 billion, led by federal Treasury bills.
The data was important as "foreign investment flows into Canada have been an important support for the Canadian dollar over the last year and are expected to continue," said Scotia Capital chief currency strategist Camilla Sutton.
Oil prices headed higher, building on Wednesday’s gain of almost $1 after the U.S. Energy Information Administration said crude supplies declined by one million barrels last week. Analysts polled by Platts expected a 2.5-million-barrel climb.
Prices were also supported by an attack on a natural gas plant deep in the Sahara in Algeria where Islamist militants have been holding dozens of hostages.
The February crude contract on the New York Mercantile Exchange gained $1.25 to a four-month high of US$95.49 a barrel.
March copper in New York rose six cents to US$3.66 a pound while February gold bullion erased early losses to gain $7.60 to US$1,690.80 an ounce.