TORONTO – The Canadian dollar closed little changed Wednesday amid a strong housing report and weak American jobs data.
The loonie was off 0.01 of a cent to 96.66 cents US as Statistics Canada reported that municipalities issued $7 billion worth of building permits in April, up 10.5 per cent from March and far more than the month-to-month decline that analysts had expected.
Meanwhile, weak U.S. economic data encouraged speculation about when the Federal Reserve might back off on its monetary stimulus.
There was disappointing job creation data two days before the release of the government’s official employment data for last month. Payroll firm ADP reported that the private sector cranked out 135,000 jobs during May, less than the 165,000 that had been expected.
Canadian employment data for May is also released Friday. Economists expect the economy created about 20,000 jobs.
Traders also took in the latest reading of the health of the U.S. non-manufacturing sector, which showed stronger expansion. The Institute for Supply Management’s index came in at 53.7, better than the 53 reading that had been expected and up from 53.1 in April. But the data also showed that hiring slowed further in May to the lowest level since July 2013, coming in at 50.1.
Also, the Fed released its latest regional economic survey mid-afternoon. The central bank’s so-called Beige Book said economic growth increased throughout the United States from April through mid-May, fuelled by home construction, consumer spending and steady hiring.
The mostly favourable report suggest that the economy and the job market are improving despite tax increases and government spending cuts that took effect this year.
But the modest or moderate improvement reported for most regions appears to fall short of the “strong and sustained growth” that Fed members have said is needed before the Fed starts tapering its bond purchases.
The Fed’s monetary stimulus program, involving spending $85 billion a month on bond purchases, has been a huge support to stock markets over the past few years. The purchases are designed to keep interest rates low and give the U.S. economy a lift.
There has been much speculation of late that generally improving data would persuade the Fed to reduce its quantitative easing program.
Commodity prices were mainly higher as July crude on the New York Mercantile Exchange gained 43 cents to US$93.74 a barrel.
July copper erased early gains to close unchanged at US$3.37 a pound while August bullion edged up $1.30 to US$1,398.50 an ounce.