Pound to Canadian Dollar Exchange Rate Falls on Domestic Data and Oil Price Rise

February 9, 2015 - Written by Toni Johnson

STORY LINK Pound to Canadian Dollar Exchange Rate Falls on Domestic Data and Oil Price Rise

The Pound fell against the Canadian Dollar as rising oil prices and positive domestic data out of the North American nation supported the ‘Loonie’.

Data released by the Canada Mortgage and Housing Corporation, showed that homebuilders remained resilient despite the recent declines in commodity prices and showed that new residential construction activity improved in the first month of the year.

According to the report, the number of housing starts increased to a seasonally adjusted figure of 187,276, an increase of 4.3% on December’s downwardly revised figure of 179,637. The number also beat economist forecasts for a figure of 178,000.

January’s gains were driven largely by multi-residential construction, which rose 12% to 115,000 units.
Alberta posted the strongest monthly gains on multiples, which rose 62% to 44,800. Urban single-family construction continued its downward slide, with starts falling nearly 4% to 57,300, below the 12-month average of 61,500.

‘The expected slowing in housing starts in energy dependent regions in January failed to materialise, indicating that at this stage, the commodity price plunge is not yet negatively feeding through to confidence channels and into homebuilding activity,’ said Laura Cooper, an economist at Royal Bank of Canada.

The Canadian Dollar also found support from a rise in crude oil prices. The value of the commodity increased due to a further drop in US oilrig counts and as the Organisation for Petroleum Exporting Countries (OPEC) said that it was cutting its forecast for non-OPEC oil supply growth. The cut in forecasts suggests that OPEC’s attempts to dent its rivals in the USA and elsewhere is working.

Data released by oil field services company Baker Hughes Inc. showed that the number of US oil rigs declined by 342 since the start of 2015. Such a decline is likely to soften US production in the second half of the year.
The OPEC report meanwhile showed that non-OPEC production would fall from 850,000 barrels per day to 420,000 barrels.

‘The main factors for lower growth prediction in 2015 are price expectations, a declining number of active rigs in North America, a decrease in drilling permits in the US and a reduction in the 2015 spending plans of international oil companies,’ OPEC said in its report.
Earlier the session oil prices had wavered as economic data out of China showed that the world’s second largest economy saw a sharp drop in imports. China’s imports of oil are expected to slow from 10% to 3% over the course of 2015.

Sterling could recover ground on Tuesday if Manufacturing and Industrial production data comes in positively.

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