Canadian dollar rises amid strong housing data, rising commodity prices

TORONTO - The Canadian dollar closed higher Wednesday amid rising commodity prices and strong housing data.

The loonie was up 0.37 a cent to 95.99 cents US as Statistics Canada reported that contractors took out $6.5 billion worth of building permits in September, up 1.7 per cent from August. That was much higher than the 0.7 per cent rise that economists had expected.

Traders also looked ahead to Thursday and the next scheduled interest rate meeting of the European Central Bank amid hopes that the latest economic data will persuade the ECB to cut its key rate to 0.25 per cent.

The EU’s statistics office said that retail sales across the 17-country eurozone fell 0.6 per cent in September from the month before.

And Markit, the financial information company, also revealed that its composite purchasing managers’ index, a broad gauge of economic activity for the eurozone, faltered in October. The October PMI reading of 51.9 points was down from September’s 27-month high of 52.2. Still, it was above the 50 threshold indicating expansion.

The figures suggest the European recovery lacks strength and is vulnerable to setbacks.

Commodity prices improved with December crude on the New York Mercantile Exchange gaining $1.43 to US$94.80 after having dropped to a five-month low of US$93.37 amid concerns about rising supplies in the United States.

U.S. crude stockpiles have increased in each of the past six weeks, mostly because of rising domestic production, and were more than 10 per cent above their five-year average near the end of October.

But prices took off late Wednesday morning after data showed inventories grew less than expected last week, rising by 1.6 million barrels, against the 2.5 million that had been expected.

December copper shed early gains to move down two cents to US$3.24 a pound while December gold rose $9.70 to US$1,317.80 an ounce.

Traders also looked ahead to other key U.S. economic data coming out this week, including third-quarter economic growth figures Thursday and the U.S. government's October employment report on Friday.

The data from both reports will help the Federal Reserve decide if the economy is strong enough to allow the central bank to start tapering its monthly US$85 billion of bond purchases.

Canadian jobs data for October also comes out on Friday.