Canada dollar up after revised building permits data

Tue May 6, 2008 9:43am EDT
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By Frank Pingue

TORONTO (Reuters) - The Canadian dollar climbed against the U.S. dollar on Tuesday as economic data which showed an unexpected drop in domestic building permits also included an upward revision for the previous month.

Domestic bond prices rose across the curve as weak earnings out of the United States underscored the troubles in the U.S. housing and credit markets, which boosted the appeal of secure assets like government debt.

At 9:20 a.m. EDT, the Canadian unit was at C$1.0125 to the U.S. dollar, or 98.77 U.S. cents, up from C$1.0135 to the U.S. dollar, or 98.67 U.S. cents, at Monday's close.

The Canadian dollar slipped to C$1.0140 to the U.S. dollar, or 98.62 U.S. cents, right after data showed Canadian building permits fell 4.5 percent in March from February, compared to market expectations for a 1.4 percent gain.

But the currency quickly rebounded as the data also showed an upward revision of February building permits to a gain of 0.8 percent, compared to an earlier reported 1-percent drop.

"Initially there was a bit of a negative reaction but I am not surprised there was no follow through," said Matthew Strauss, senior currency strategist at RBC Capital Markets. "Building permits are fairly volatile ... and the headline number was offset by a sharp revision in the previous month."

Further data this week include the Ivey Purchasing Managers Index for April at 10:00 a.m., April housing starts on Thursday, and the key April employment report and March international merchandise trade data on Friday.

The Canadian dollar will likely get further direction from the performance of oil prices since Canada is a major producer and exporter of oil.   Continued...