TORONTO – The Canadian dollar was flat Monday, as traders digested the Bank of Canada’s latest survey of businesses.
The loonie dipped 0.08 of a cent to 93.76 cents US.
The Bank of Canada says Canadian firms remain upbeat about future prospects and the economy, although the level of enthusiasm appears to have dropped off a bit.
The central bank’s latest business outlook survey shows executives giving generally positive responses across a number of questions, from expectations on sales activity, hiring intentions and investment plans. But in most cases, confidence levels dropped from the spring survey, which suggested firms were gearing up for stronger economy.
The bank analysis of the results is that businesses have not materially changed their expectations from the spring.
The survey is one of the ways the central bank gauges how the economy is faring. It relies on a summary of interviews conducted with senior management at about 100 Canadian firms on topics such as demand and capacity, and how they view future economic activity.
April’s survey showed that there were some signs of improvement for exporters, with businesses saying that they had a positive future outlook, based on a strengthening U.S. economy and a depreciation of the Canadian dollar.
The Canadian dollar is entering the second half of the year around the 94-cent US level, close to its highest point for 2014 so far and much to the discomfort of the country’s exporters.
Those elevated levels could be tested Friday when Statistics Canada releases June employment data. The agency is expected to report that about 24,000 jobs were created last month compared with 25,800 in May, with the jobless rate remaining unchanged at seven per cent.
Ian Nakamoto, director of research at 3MACS, said the loonie could fall if the figures do not come in as expected.
Analysts observe that the dollar’s rise from 89 cents US earlier in the year is due to a number of reasons, including rising inflation, data suggesting the outlook for exporters is improving, a better American economic climate and rising oil prices.
“The net CAD (Canadian dollar) position has shifted net positive for the first time since February 2013, highlighting that finally sentiment towards CAD has turned favourable; removing a major weight against CAD,” said Sutton. “The net long position… is very small, but it is not the size but the shift to a more balanced outlook that is important.”
Meanwhile, commodity prices were mixed in electronic trading on the New York Mercantile Exchange with August crude 77 cents lower at US$103.29 a barrel.
August gold bullion dipped $4.90 to US$1,315.70 an ounce, while September copper was down two cents at US$3.25 a pound.
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