TORONTO (Reuters) - The Canadian dollar pushed through parity against the greenback for a second day on Wednesday, nearing a 21-month high, but then fell back after Canadian building permits data came in weaker than the market had forecast.
Data showed the value of Canadian building permits fell in February from January on a sharp decline in apartment building construction plans, while single-family housing approvals soared to a record high.
Building permits, a barometer of future construction activity, slid 0.5 percent in the month to C$5.7 billion versus market expectations of a 2 percent gain.
The Canadian dollar weakened to C$1.0037 to the U.S. dollar, or 99.63 U.S. cents, from about 99.72 U.S. cents just before the data’s release.
“Building permits were slightly weaker than expected, but they’re not really a top-tier indicator for us,” said Camilla Sutton, currency strategist at Scotia Capital. “Generally, what we’re seeing in the market today is that oil is off its highs and the U.S. dollar is slightly stronger against most currencies.”
Sutton said market watchers will be closely watching for the Ivey Purchasing Managers Index, which is due out at 10 a.m. (1400 GMT)
“In the current environment the market is much more focused on the PMI indexes. Generally, last week, we saw quite strong PMI indexes come out globally,” Sutton said.
At 9:25 a.m. (1325 GMT), the Canadian dollar was at C$1.0015 to the U.S. dollar, or 99.85 U.S. cents, a hair lower than Tuesday’s close at C$1.0012 to the U.S. dollar, or 99.88 U.S. cents.
Earlier, the currency rose as high as C$0.9977, or US$1.0023, its highest intraday level since July 15, 2008.
Market watchers were doubtful that the commodity-linked currency’s rise had much more momentum behind it as oil prices slipped from 18-month highs and euro zone worries persisted.
“We continue to hug parity but there is no conviction at this point in time to really take it (dollar/Canada) much lower,” said Matthew Strauss, senior currency strategist at RBC Capital Markets, pointing to an overnight backdrop of risk appetite evaporating.
Oil slipped from 18-month highs around $87 after two weeks of gains as the U.S. dollar strengthened.
“From a commodity or a risk-theme backdrop the market is looking for new direction but pure momentum carried the Canadian dollar to its new highs,” Strauss said.
Canadian bond prices were mostly higher across the curve, mirroring the U.S. Treasury market, where short and medium term Treasuries gained while long-dated prices softened.
The two-year government bond was up 6 Canadian cents at C$99.40 to yield 1.823 percent, while the 30-year bond was unchanged at C$114.40 to yield 4.114 percent.
Reporting by Jennifer Kwan; editing by Peter Galloway