TORONTO – The Canadian dollar was slightly lower Monday morning following seven trading days of gains.
The loonie was off 0.04 of a cent to 90.55 cents US after rising one-quarter of a cent Friday following a strong jobs report for January. The Canadian economy created 29,400 jobs, far higher than the 20,000 that economists had been expecting, while the unemployment rate slid to 7.0 per cent from 7.2 per cent.
There was data out Monday morning showing a slowdown in Canadian housing construction. Canada Mortgage and Housing Corp. said housing starts for January came in at a seasonally adjusted pace of 180,248, down from 187,144 in December.
Traders are now looking to Tuesday when the federal government unveils its latest budget, which Finance Minister Jim Flaherty releases after markets close.
BMO Capital Markets senior economist Benjamin Reitzes said markets aren’t expecting any big surprises in the document.
“The name of the game is ensuring 2015 sees a surplus, which appears to be easily attainable given forecasts for improving economic growth,” Reitzes said.
Traders will also take in the latest reading on manufacturing shipments later in the week.
Investors are also looking ahead to comments by the new Federal Reserve chair, Janet Yellen, before the U.S. Congress. They’ll be looking for any sign in her remarks Tuesday that the Fed might alter plans to wind down its bond-buying stimulus program.
The Fed has cut its monthly bond purchases by US$20 billion, to $65 billion a month, and analysts generally expect the Fed to continue to taper at $10 billion a meeting and wrap up the program in October.
The loonie has enjoyed a steady series of advances after the currency hit its worst levels in 4 1/2 years in late January.
Analysts have pointed to data showing the Canadian economy grew for a fifth straight month during November while markets have been pricing in a lower likelihood of the Bank of Canada cutting interest rates.
The loonie has also ridden a wave of optimism that the Keystone XL pipeline, which would transport oilsands crude from Alberta to refineries along the Texas Gulf Coast, will be approved. Such a move could give a boost to the energy sector.
On top of that, the International Monetary Fund expects the Canadian economy will grow 2.2 per cent this year, up from an estimated 1.7 per cent in 2013 as the U.S. continues to import rising volumes of oil from Canada.
On the commodity markets, March crude on the New York Mercantile Exchange gained 37 cents to US$100.25 a barrel.
March copper was two cents lower at US$3.22 a pound while April gold rose $12.20 to US$1,275.10 an ounce.