By Yasin Ebrahim
Investing.com – The loonie fell against the dollar on Thursday as falling oil prices and increased appetite for safe-haven demand offset data showing better-than-expected Canadian housing activity.
Canadian housing starts inched up to 212,000 in June, adding to strong gains following a bottom in April, and beating forecasts for a rise to 198,000.
The move was largely expected given the favorable backdrop of low-interest rates and government stimulus that has helped cushion the fall out from job losses.
“Against that backdrop it is not so surprising that housing activity has been more resilient than many had been expecting,” RBC said. “Government support programs like CERB payments mean that household incomes have probably held up significantly better than job markets to-date.”
The better-than-expected housing data was offset by renewed a fall in oil prices and an uptick in safe-haven demand for the greenback.
Oil prices fell nearly 3%, the most in over two weeks, as growing Covid-19 cases have forced some states roll back reopening measures and raised investor concerns that strong gasoline demand will be short-lived.
A day earlier, the Energy Information Administration released data showing U.S. gasoline demand rose to its highest in four months. But the peak could prove shortlived amid signs demand is tailing off.
“[T]he week building up to the July Fourth weekend may prove to be a temporary peak … both activity trackers and retail sales indicators recording week-on-week falls in the last few days,” JBC Energy said.
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