Mixed Canadian Data Keeps Loonie Steady

Indicators of Canadian manufacturing shipments, existing home sales and new vehicles sales were the soup de jour for market participants starved for economic data with which to value the loonie.  The best indicator amongst the three was the report on May existing house sales.  Sales surged 2.4% last month as consumer confidence was buoyed by a record low unemployment rate and bloating wages.  In addition to the better sales figure, a component measuring the average price of existing homes breached the C$300,000 mark for the first time on record, suggesting the housing sector will contribute to economic growth should the manufacturing industry cool.  The better of the remaining two indicators was April vehicle sales, which fell 0.7% for the month.  The disappointing nature of this decline was tempered somewhat however given expectations of a 1.0% decline for April and a downwardly revised 0.4% rise in the month before.  Auto sales suffered in April as gasoline prices approached record highs and higher interest rates made a car purchase an expensive venture.  The deciding factor for traders still positive the loonie was the poor showing in the manufacturing shipments for April.  Factory shipments abroad dropped a greater than expected 1.5% as the nations currency appreciated 12% on the year, making Canadian goods more expensive than global substitutes.  An expensive exchange rate is slowly starting show its effects in sections of the export dependant Canadian economy.  Manufacturing capacity dropped in the first three months of the year, while new orders fell 2.3%.  Additionally helping to mediate loonie volatility was the halt in yesterday’s commodity declines.  Gold, crude, copper and other Canadian exports made modest recoveries from Tuesday session lows.
 
Canada’s main equity index rose for the first time in eight days as the recovery in commodities floated material producer shares with it.  The S&P/TSX Composite Index was 0.63% or 69.05 points higher at 10,973.39 by 16:55 GMT.  Energy producers made the biggest contribution to advances on the session.  The worlds largest gold miner, Barrick Gold, saw shares advanced C$0.39 to C$30.34, while shares of the country’s number two, Goldcorp Inc., rose C$0.76 to C$28.36.  In the energy field, EnCana tacked on C$0.79 to C$52.10 share value.  Restraining a bigger rally was the drop in the financial sector, which fell after fears of higher US interest rates was stocked by the day’s inflation gauge.  Canadian insurer, Manulife Financial, dropped C$0.79 to C$34.67.