Canadian dollar up amid positive Chinese data
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 slightly higher Wednesday amid lower commodity prices and encouraging economic news from China.
The loonie rose 0.04 of a cent to 98.57 cents US, off the highs of the day on geopolitical concerns centred around threats from North Korea.
Traders were also rattled after Washington said a missile defence system was being sent to the Pacific island of Guam amid continued threats from North Korea.
The move came a day after the country said it would restart its long-shuttered plutonium reactor and a uranium enrichment plant. Both could produce fuel for nuclear weapons that North Korea is developing.
Also, the South Korean news agency Yonhap said that North Korea's military has announced that it would take a series of military actions against the United States.
Defence secretary Chuck Hagel said North Korea’s rhetoric presents a real, clear danger and threat to the U.S. and its allies.
Earlier, data showed that China's service sector expanded at a faster pace last month.
China's non-manufacturing Purchasing Managers’ Index rose to 55.6 from 54.5 in February, according to the National Bureau of Statistics and the China Federation of Logistics and Purchasing.
A separate services gauge from HSBC and Markit Economics rose to 54.3, from 52.1. Any reading above 50 signals expansion.
Positive news from the world's second-biggest economy is generally supportive of the commodity sensitive Canadian currency as it indicates higher demand for oil and metals.
However, commodity prices were lower Wednesday in the wake of soft U.S. data as the May crude contract on the New York Mercantile Exchange declined $2.74 to US$94.45 a barrel.
Metals also retreated as June gold bullion on the New York Mercantile Exchange was down $22.40 at US$1,553.50 an ounce.
May copper shed five cents to US$3.33 a pound
Traders also started to reassess their estimates for March U.S. employment growth and looked to slower expansion in the American non-manufacturing sector.
Two days before the release of the U.S. government's jobs data for March, Automatic Data Processing reported that the American private sector created 158,000 jobs in March, which was below the 215,000 reading markets expected.
Before the release of the ADP data, economists had expected the government report would show a total of 190,000 jobs had been cranked out last month.
Canadian jobs data also comes out Friday, with the consensus estimate by economists calling for about 6,500 positions to have been created in March. But BMO Capital Markets thinks the economy created something in the order of 18,000 jobs following February's blowout report showing just under 51,000 new jobs.
Also, the Institute for Supply Management’s non-manufacturing index for March came in at 54.4, down from the February reading of 56 and below forecasts for a 55.5 reading.
There was also further evidence that the U.S. housing recovery strengthened ahead of the all-important spring buying season.
U.S. home prices jumped in February by the largest amount in seven years, up 10.2 per cent compared with a year earlier. Prices have now increased on an annual basis for 12 straight months, underscoring the recovery’s steady momentum.
Investors also looked to the start of a two-day meeting of Japan’s central bank. It is holding its first policy meeting under new governor Haruhiko Kuroda amid expectations of fresh moves to ease monetary policy and spur a recovery in the world’s third-largest economy.
Kuroda took the helm at the Bank of Japan on March 19, vowing to do whatever is necessary to break Japan’s economy out of deflation and attain a two per cent inflation target.
Kelowna native Kelsey Serwa finished second and confirm a spot on Team Canada headed to Sochi.
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