Loonie lower amid data showing weakening housing sector, higher commodities

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TORONTO - The Canadian dollar declined Wednesday amid data showing slightly fewer housing starts last month and an advance in oil and copper prices on global markets.

The loonie was down 0.06 of a cent to 101.29 cents US as Canada Mortgage and Housing Corp. reported that December starts came in at a seasonally adjusted annual rate of 197,976. That was down slightly from 201,376 in November but still higher than the 195,000 that economists had expected.

CMHC said the decline was due to fewer starts in rural areas of the country while Canadian urban starts remained stable.

"Today’s data suggest that the homebuilding sector, once an engine of growth for the Canadian economy, is on a clear softening trend," said CIBC World Markets economist Emanuella Enenajor.

Commodity prices were mixed.

The February crude contract on the New York Mercantile Exchange drifted three cents higher to US$93.18 a barrel ahead of the weekly U.S. inventory report. Data for the week ended Jan. 4 is expected to show a rise of 1.5 million barrels for crude oil and an increase of 2.6 million barrels in gasoline stocks, according to a survey of analysts by Platts, the energy information arm of McGraw-Hill Cos. The Energy Department’s Energy Information Administration releases its crude inventories report later Wednesday.

March copper gained three cents to US$3.70 a pound while February bullion rose $1.20 to US$1,663.40 an ounce.

Organizations: Canada Mortgage and Housing, CIBC World Markets, New York Mercantile Exchange McGraw-Hill Cos. The Energy Departments Energy Information Administration

Geographic location: U.S., TORONTO

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