TORONTO - The Canadian dollar traded at fresh multi-year lows Thursday amid readings showing a slowdown in the housing sector.
The loonie fell 0.48 of a cent to 92.08 cents US, its lowest level since September, 2009, as Canada Mortgage and Housing Corp. said housing starts for December came in at an annual rate of 189,672 units in December, which met economist expectations. That was a decrease from 197,797 in November.
"Look for further cooling in starts this year to levels consistent with demographic demand," warned BMO Capital Markets senior economist Robert Kavcic.
Other data from Statistics Canada showed that contractors took out $6.8 billion worth of building permits in November, down 6.7 per cent from October. The agency noted that the decline in December followed an eight per cent gain in November.
The dollar was already down sharply before the housing data came out. The currency has fallen more than 1.75 cents US since last Friday alone, buffetted by data earlier in the week that showed a growing trade deficit.
Another report showed the U.S. trade deficit dropped 12.9 per cent in November to its lowest level in four years. Imports, including Canadian crude oil, dropped 1.4 per cent.
Also, the U.S. dollar has strengthened on speculation about how fast the U.S. Federal Reserve might wind down its massive bond buying program.
The Fed decided last month to start tapering its US$85 billion of monthly bond purchases by $10 billion with further cuts contingent on economic performance, particularly improvements in job creation.
The minutes from that Fed meeting were released on Wednesday but failed to provide clues about what the Fed might do.
However, there is also a growing feeling that Friday's U.S. government employment report for December will exceed expectations that about 195,000 jobs were created. Payroll firm ADP said Wednesday that the U.S. private sector alone created 238,000 jobs in December.
Also on Thursday morning, the U.S. Labor Department reported that applications for jobless insurance fell by 15,000 last week to 330,000.
Canadian jobs data will come out on Friday with expectations that about 13,000 jobs were cranked out during December.
In other economic developments, The European Central Bank left its key interest rate unchanged at a record low of 0.25 per cent on Thursday despite worries about a weak recovery and low inflation.
On the commodity markets, the February crude contract on the New York Mercantile Exchange gained 41 cents to US$92.74 a barrel.
March copper lost three cents to US$3.31 a pound while February bullion gained $1.50 to US$1,227 an ounce.