C$ resumes climb after jump in building permits

TORONTO: The Canadian dollar strengthened against the greenback on Monday, resuming its recent climb after data showed building permits surged far more than expected in May.

The bounce put the loonie on strong footing at the start of a week that features some key Canadian economic data, including housing starts and the monthly unemployment report.

The value of Canadian building permits shot up by 13.8 percent in May, the fastest rate since July 2013. Those figures lifted the Canadian dollar as high as C$1.0632, helping it reverse much of Friday's sharp drop.

"It starts us off with some pretty positive data here in a sector that people keep expecting to show signs of weakening," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.

"While we do look for some second-half slowdown in housing, clearly that hasn't begun yet."

Later on Monday, investors will also get reports on purchasing activity and the Bank of Canada's business outlook survey.

The Canadian dollar was at C$1.0640 to the greenback, or 93.98 US cents, stronger than Friday's close of C$1.0657, or 93.84 US cents.

The Canadian dollar is up nearly 3 percent since early June after a rally in which the currency touched a six-month high last week. A number of factors have pushed the loonie higher, including firmer domestic inflation, stronger oil prices and a better outlook for global growth.

Investors rushing to cover their Canadian dollar short positions have exacerbated the upward momentum.

Data from the Commodity Futures Trading Commission's weekly commitments of traders report showed the net Canadian dollar position has shifted to positive for the first time since February 2013, highlighting the favorable turn in sentiment toward the currency, Scotiabank wrote in a note.

The next support levels for the US dollar-Canadian dollar pairing could come at C$1.0620 and C$1.0595, Mikolich said.

"I think (there is) still a little bit of room to move down but you do continue to hear calls for a stronger US dollar into the second half," Mikolich said.

"So one begins to think we're starting to see some of the bottom end of what the likely trading range could be, but I think it's too soon to call that we've seen the bottom yet."

Canadian government bond prices were mostly higher across the maturity curve, though the two-year was off 1 Canadian cent to yield 1.143 percent. The benchmark 10-year was up 16 Canadian cents to yield 2.313 percent.