The Canadian loonie and the United States dollar have been in a rather close horserace over the last couple of years. This past Friday Canada’s dollar dropped 0.43 of a cent, meaning that 100 cents in Canada was the equivalent of 101.02 cents in the United States. The drop happened despite the still strong reports on the Canadian economy and favorable reports on the China front. Will this have any effect on the Vancouver real estate market?
According to Statistics Canada, sales in the manufacturing sector went up by 1.7 percent this past November, bringing in a total of $49.9 billion. That is the highest volume since back in May of 2012. The numbers also surpassed the 1.1 percent increase that economists had predicted. The most profitable sectors were in the chemical industries, primary metals and in the exportation of transportation equipment.
China also saw healthy numbers. The last quarter of 2012 showed a 7.9 percent increase in growth, bettering the third quarter’s increase of 7.4 percent. Year end statistics showed that China saw growth of 7.8 percent, a bit of a slow down in what is now the second largest economy on the planet. This was the weakest yearly national growth for that country since back in the 1990s.
Factors contributing to the slow down include the implementation of government controls intended to cool down the country’s real estate boom and rapid inflation. Both of these items were triggered by a huge stimulus package initiated in 2008 in response to the near-global economic collapse. But still, Chinese exports diminished, which could have caused a decline in employment and perhaps civic unrest.
It is still possible for China to experience more of a setback if demand for exports weakens further or if the government does not continue its investment spending, attributed to the recovery.
Copper, of which China is the biggest importer, saw its prices rise after the economic numbers were released. In a way this metal is a kind of barometer for the economic health of China since they use it in so many industries and applications. At the New York Stock Exchange, copper was coming out at $3.68 USD per pound, a two cent increase, for contracts in March.
Oil prices, which previously had increased by $2 per barrel over the last two trading sessions, saw a decrease in price. The Nymex Index showed the price at $95.40 USD per barrel for the February contract, a nine cent decrease. Gold was down $1.60, coming in at $1,689.20 USD per ounce.
Stock traders were also looking for signs from the Bank of Canada as to whether interest rates will be raised, and if so, when. A report is due on Wednesday. Canada’s central bank will also release the Monetary Policy Report this coming Wednesday.