TORONTO – The Canadian dollar closed higher Tuesday after a string of losses following the Bank of Canada’s signal last week that it will be slower to raise interest rates than anticipated.
The loonie rose 0.41 of a cent to 99.76 cents US following a flat close on Monday.
The dollar had tumbled about 1.4 cents US in the previous three sessions to a six-month low after the central bank indicated last Wednesday that Canada’s economy was weaker than expected and the bank will be slower to raise interest rates.
The announcement pushed the currency below parity with the greenback for the first time since mid-November. Higher rates tend to attract investors and push up the currency.
Meanwhile, traders looked ahead to the latest reading on Canadian economic growth later in the week.
On Thursday, Statistics Canada is expected to report that gross domestic product grew by 0.2 per cent during November, up from 0.1 per cent in October.
On the economic front, new data shows that house prices in the U.S. continue to edge higher. The widely-watched Case-Shiller Index showed U.S. house prices rose by a seasonally adjusted 0.63 per cent in November, slightly below expectations for a 0.7 per cent gain. That translated into an annual rate of 5.52 per cent which was in line with expectations and the highest since 2006.
Meanwhile, the Conference Board reported that its consumer confidence index for January came in at 58.6, down from 66.7 in December.
The U.S. Federal Reserve started its two-day meeting on interest rates Tuesday. No one expects the central bank to move on rates but traders will look for clues as to when the Fed might end its latest round of economic stimulus.
The key piece of data for the week comes out Friday. Economists generally expect the U.S. non-farm payrolls report to show that the economy created 153,000 jobs in January, slightly below December’s 155,000 reading.
Traders will also take in the latest readings on U.S. economic growth during the week.
Commodity prices were mixed as the March crude contract on the New York Mercantile Exchange added $1.13 to US$97.57 a barrel.
March copper on the Nymex was up three cents at US$3.69 a pound while February gold gained $7.90 to US$1,660.80 an ounce.