Canadian dollar near 7-month high after upbeat Chinese data

TORONTO: The Canadian dollar strengthened against its broadly weaker US counterpart on Monday as upbeat services sector data from China supported oil prices, with the loonie approaching a seven-month high it notched on Friday.

The US dollar was set for a fourth straight month of losses after a US Federal Reserve policy shift on inflation.

The price of oil, one of Canada's major exports, was underpinned by a 30% cut in Abu Dhabi crude supplies and data showing China's non-manufacturing PMI expanded at a solid rate in August.

US crude prices were up 0.2% at $43.07 a barrel, while the Canadian dollar was trading 0.3% higher at 1.3052 to the greenback, or 76.62 US cents. The currency, which on Friday touched a seven-month high at 1.3043, traded in a range of 1.3050 to 1.3104.

Producer prices in Canada rose by 0.7% in July from June, matching expectations, data from Statistics Canada showed.

On Friday, data showing a record surge in Canada's real gross domestic product in June supported the view that third-quarter economic growth will be rapid after a record slump in the second quarter.

Canada's employment report for August is due on Friday, which could add to evidence of economic recovery. Analysts in a Reuters poll expect jobs to increase by 275,000.

Speculators have reduced bearish bets on the loonie, data from the US Commodity Futures Trading Commission showed on Friday. As of Aug. 25, net short positions had decreased to 29,318 contracts after reaching the highest since May at 33,587 in the prior week.

Canadian government bond yields were higher across a steeper curve, with the 10-year up 1.8 basis points at 0.651%. On Friday, the 10-year yield touched its highest intraday in nearly three months at 0.697%.