Globally economy constrained by uneven recovery
The latest overseas economic data weighed heavily on commodities, the loonie and the U.S. dollar
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TORONTO—The Canadian dollar was lower October 7 amid a sharp drop in building permits and the American currency rose amid glum economic data from Europe and Asia.
The dollar was down 0.12 of a cent to 89.72 cents US after jumping just over a full U.S. cent as the American dollar weakened.
Statistics Canada reported the total value of building permits issued by Canadian municipalities fell 27.3 per cent to $6.7 billion in August.
The August decline was mainly the result of lower construction intentions for non-residential buildings in Quebec and residential buildings in Ontario.
Overseas, concerns grew that Germany’s economy may not rebound as expected in the third quarter as data showed a four per cent drop in industrial output during August. It was the biggest monthly drop in industrial production in five years and was far bigger than the 1.5 per cent decline expected in markets.
The gloomy data came on the heels of another report showing that German factory orders dropped 5.7 per cent in August from the previous month.
Also, the World Bank said developing countries in East Asia Pacific will see slightly slower economic growth this year. It says growth will come in at 6.9 per cent this year and next, down from 7.2 per cent in 2013. It adds that the pace of growth in the region, excluding China, will pick up next year.
The World Bank says Chinese growth will ease slightly to 7.4 per cent this year and 7.2 per cent in 2015, “as the government seeks to put the economy on a more sustainable path with policies addressing financial vulnerabilities and structural constraints.”
The latest overseas economic data also weighed on commodities as November crude in New York dipped 26 cents to US$90.08 a barrel, December copper was off a cent to US$3.03 a pound while December gold was off a dime to $1.50 to US$1,207.20 an ounce.
In other economic developments, U.S. home prices increased in August but at a slower pace. Real estate data provider CoreLogic says prices rose 6.4 per cent in August compared to the prior 12 months. That marks a decline from an annual gain of 6.8 per cent in July.
The major economic release of the week comes on Friday when Statistics Canada releases the employment report for September. Economists expect that the economy cranked out about 15,000 jobs.
September data on housing starts will be released by Canada Mortgage and Housing Corp. on Wednesday.