C$ gains to two-week high on firm building permits data

TORONTO: The Canadian dollar firmed against the greenback to a two-week high Thursday on sturdy building permits data in January, though gains could be capped as investors positioned ahead of US and Canadian employment data due out on Friday.

Data showed the value of building permits issued in Canada jumped 8.5 percent in January, far surpassing the 1 percent increase economists had forecast. As well, construction intentions in the residential sector hit a record high.

The loonie also benefited from some better risk appetite in markets overnight, as investors were hopeful there would be diplomatic efforts to cool the crisis in Ukraine as European leaders gathered for an emergency summit.

"What we're seeing is the hope or expectation that there will be a diplomatic resolution to everything," said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.

Even so, Crimea's parliament voted to join Russia, setting a referendum within 10 days that could potentially mark an escalation of tensions in the region.

The Canadian dollar was at C$1.1001 to the greenback, or 90.90 US cents, stronger than Wednesday's close of C$1.1038, or 90.60 US cents. The loonie hit a session high of C$1.0992, its highest since Feb. 19.

Investors were also turning their attention to unemployment data that will be released early Friday in both Canada and the United States. Canada is forecast to have added 15,000 jobs in February, a slower pace that the month before, while the unemployment rate is seen holding steady at 7 percent.

Market participants were digesting Wednesday's strong move higher for the Canadian dollar after the Bank of Canada kept to its neutral policy stance, rather than turning even more dovish as some had feared.

"I could see us taking a little bit of a pause today after the move yesterday with the loonie strength," said Smith.

"At this point, we'll probably start to see traders jockeying for position ahead the nonfarm payrolls in the US and the Canadian data, too."

Canadian government bond prices were lower across the maturity curve, with the two-year down 3 Canadian cents to yield 1.060 percent and the benchmark 10-year down 36 Canadian cents to yield 2.517 percent.