CN: Canadian dollar heads higher amid strong economic data from Canada, U.S.
TORONTO - The Canadian dollar was higher Monday in the wake of strong economic reports last week that could persuade the Bank of Canada to raise its key interest rates later in the year.
The loonie was up 0.51 of a cent from Thursday's close to 104.19 cents US. The Bank of Canada was closed Friday for Canada Day holiday.
The dollar rallied more than three per cent from its lows of last week.
"Last week should have soothed a lot of fears about the Canadian fundamental backdrop, and has likely increased the concern at the Bank of Canada," said Scotia Capital chief currency strategist Camilla Sutton.
She observed in a commentary that inflation data came in well above expectations in May, with the headline figure rising 0.7 per cent month over month and core inflation, which excludes volatile items such as fuel and food, jumping by 0.5 per cent.
"This, combined with a stronger than expected April gross domestic product print of 0.0 per cent month over month (in April) with an upward revision to March data is encouraging, especially as the April data would have been negatively impacted by supply chain disruptions from Japan. Accordingly, it is likely that the Bank of Canada is growing increasingly concerned about the level of interest rates in Canada."
Traders will also be looking to Friday's Canadian employment report for June. Economists expect the economy added about 15,000 jobs while the jobless rate ticked up by 0.1 per cent to 7.5 per cent.
American markets were shuttered for the July 4 holiday but commodity prices advanced in electronic trading on the New York Mercantile Exchange.
The August oil contract ticked 16 cents higher to US$95.10 a barrel.
The August gold contract rose $11.80 to US$1,404.40 an ounce while the September copper contract was unchanged at U US$4.30 a pound.
The loonie also made headway amid some strong economic data that came out on Friday from the U.S., Canada's biggest trading partner.
The Institute for Supply Management reported its index for June showed that manufacturing activity unexpectedly picked up. The ISM said its index came in at 55.3, up from 53.5 in May and stronger than the 52 reading that economists expected.
