TORONTO: The Canadian dollar was little changed against its US counterpart on Tuesday as a stronger greenback, bolstered in part by supportive housing-related data, offset a rise in US crude prices, while overall trading was extremely range-bound.
US housing starts fell last month after a hefty increase the prior month, but a surge in permits for future construction to a near eight-year high signaled underlying strength in the market, which has seen prices and sales rising.
The data comes as Federal Reserve officials are gathered for a policy meeting that ends tomorrow. Investors have been shifting their focus toward the Fed and how it views the latest round of economic data. The US central bank is widely expected to resume raising interest rates sometime this year, but markets are looking for clues on whether it will come sooner or later.
"I don't think the Fed's going to do anything until later this year," said David Bradley, a director of foreign exchange trading at Scotiabank, adding that he expects the Canadian dollar to trade between C$1.1950 and C$1.26 over the coming weeks and months.
"I don't see anything imminent that will take us out of the currency range."
The Canadian dollar finished the session at C$1.2312 to the greenback, or 81.22 US cents, not far off the Bank of Canada's official close of C$1.2317, or 81.19 US cents. The currency traded between C$1.2302 and C$1.2347 during the session.
US crude oil prices edged up, supported by a tropical storm that was moving ashore in the oil-producing state of Texas, but a global supply glut limited gains and put Brent under pressure. US crude settled up 45 cents to $59.97 a barrel, while Brent crude lost 25 cents to $63.70.
US housing data showed groundbreaking dropped 11.1 percent to a seasonally adjusted annual pace of 1.04 million units, while permits for future home building increased 11.8 percent to a 1.28 million-unit rate, the highest since August 2007.
Domestically, foreign investors bought Canadian securities for the fourth straight month in April, snapping up C$12.94 billion to set a record high for the opening four months of a year.
Canadian wholesale trade data for April is due at 8:30 a.m. EDT (1230 GMT) on Wednesday, followed by the Fed's rate decision at 2:00 p.m. (1800 GMT).
Canadian government bond prices were higher across the maturity curve, with the two-year price up 3 Canadian cents to yield 0.609 percent and the benchmark 10-year up 25 Canadian cents to yield 1.740 percent.
The Canada-US two-year bond spread was -8.5 basis points, while the 10-year spread was -56.9 basis points.
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