"The significant jump in October is a sign that global economic momentum is continuing to improve"
- Craig Wright, chief economist at RBC
Though Canadian economy sent mixed signals on Thursday, the loonie soared versus the greenback, hitting 1.0411. There were two releases with a high importance on Thursday– Ivey PMI and building permits. While building permits advanced 1.7% in September, recovering from a 20% decline a month earlier, this figure is significantly lower from a 6.0% gain expected by market.
There was practically no market reaction after this data, as traders were focusing on the IVEY PMI. As soon as Richard Ivey School of Business reported business activity improved in October, on the back of optimism about the healthy economic recovery, traders rushed to buy the Canadian currency. Data showed a gauge of business activity in the public and private sector rocketed to 62.8 in October, posting an impressive jump from September's 51.9. Moreover, it offset the median estimate projected by analysts, who called for a 54.7 figure.
Canadian policymakers were disappointed with the pace of growth so far. However, last week's report showed the economy expanded 0.3% in August, supported by higher extraction of oil and gas. Taking into account latest welcoming signs, analysts may suggest the growth would be able to offset official estimates, which stands for a 1.6% expansion this year and 2.3% in 2014.
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