The Canadian dollar was higher Tuesday amid a general improvement in risk appetite on financial markets and strong U.S. economic data.
The commodity-sensitive loonie was off early highs amid accelerating price declines for gold, copper and oil but still up 0.12 of a cent (U.S.) at 98.48 cents after earlier rising to a six-week high of 98.77 cents.
Traders looked to the February report on U.S. factory orders, which showed a jump of 3 per cent following decline in January that was revised to 1 per cent from 2 per cent.
Markets also got lift from strong auto sales figures for the U.S.
Chrysler’s U.S. sales rose 5 per cent in March as the company sold more cars and trucks than in any month since the U.S. went into recession in December 2007 – several months before Canada was dragged into a global downturn.
Chrysler sold almost 172,000 cars and trucks in March, led by the Ram pickup with an increase of 25 per cent.
GM sales rose 6.4 per cent to 245,950 while Ford sales jumped 5.7 per cent in its best month since May 2007.
On the commodity markets, the May crude contract on the New York Mercantile Exchange dipped 66 cents to US$96.41 a barrel.
May copper was off a penny at $3.36 a pound after closing Monday at an eight-month low, while June gold bullion declined $20 to $1,580.80 an ounce.
The steady recovery in the U.S. has been supporting markets in the face of financial trouble in the 17-country euro zone, where the economy continues to shrink as governments deal with high levels of debt by imposing deep budget cuts. Data released Tuesday showed that unemployment in the countries that use the euro hit a record high in January and February of 12 per cent, the highest since the currency was launched in 1999.
The tiny Mediterranean country of Cyprus has also recently deepened concerns about the future of the currency union. The worry in the markets is that the chaos surrounding the country’s bailout may have further dented confidence across the euro zone, which could further depress economic performance.
Scotia Capital said another part of the reason for the gain was a report from the Reserve Bank of Australia “which highlighted that downside risks to global growth have decreased and that growth in China has stabilized.”
That assessment followed the release of data Monday showing that China’s manufacturing sector picked up in March. The country’s Federation of Logistics and Purchasing Managers’ Index rose to 50.9 in March from 50.1 in February, which was the lowest reading in five months. Numbers above 50 denote expansion on a 100-point scale.
Chinese manufacturing is closely watched as an indicator of global consumer sales and demand for commodities such as copper and oil.