TORONTO: The Canadian dollar hit a session high against the greenback on Tuesday after stronger-than-expected US data boosted assets with strong ties to economic growth in the United States, Canada's largest trading partner.
The US Institute for Supply Management report showed the pace of growth in the US manufacturing sector picked up in April to its highest level in 10 months, suggesting the economy still had some resilience after indications it had lost momentum at the start of the second quarter.
In the aftermath of the data, the currency rallied to C$0.9841 versus the US dollar, or $1.0162, from around C$0.9887, or $1.0114 heading into the release.
"This would largely be driven by the ISM," said Mazen Issa, Canada macro strategist at TD Securities.
"Expectations were for it to retrench a little bit. I think even the internals of the report were fairly strong as well, so overall the very strong report would bode quite well for the Canadian dollar."
The recovery for the Canadian dollar came after both Canada and Australia, whose economies are closely linked to demand in the global economy, disappointed markets with weaker than expected growth in Canada and a surprise 50-basis point rate cut by the Reserve Bank of Australia.
Still, Canada's currency outperformed its commodity cousins, the Australian and New Zealand dollars, the main movers among the G10 currencies along with the Japanese yen.
At 11:01 a.m. (1501 GMT), the Canadian dollar CAD=D4 stood at C$0.9844 against the US dollar, or $1.0158, up from Monday's session close at C$0.9879 versus the US dollar, or $1.0122.
Matt Perrier, a director of foreign exchange sales at BMO Capital Markets, noted the next area of Canadian dollar resistance against its US counterpart in the $0.9800-25 range.
Against the Australian dollar, Scotia Capital pointed to resistance for the Canadian currency at C$1.0157.
Canadian bond prices turned negative following the solid ISM data and continuing to outperform US Treasuries.
Canada's two-year bond eased 3 Canadian cents to yield 1.352 percent, while the benchmark 10-year bond fell 22 Canadian cents to yield 2.062 percent.
Comments
Comments are closed for this article.