The Canadian dollar closed higher Monday on indications that the U.S. economy is bouncing back strongly in the second quarter following a weather-affected first quarter.
The loonie climbed 0.24 of a cent to end at 91.31 cents (U.S.) as the Institute for Supply Management’s index hit 55.2 in April versus the reading of 54 that economists had expected.
Traders also took in data showing that Chinese manufacturing shrank in April for the fourth month in a row and looked ahead to two key Canadian economic reports coming out this week.
The HSBC index of Chinese factory activity showed that Chinese manufacturing only rose by 0.1 point to 48.1 in April on a 100-point scale in which readings below 50 indicate contraction. The gauge also fell short of its already weak preliminary result, raising concern among investors that the slowdown in the world’s second-biggest economy is entrenched.
The dollar could find some further movement from the release of the latest reading on Canadian trade on Tuesday and employment on Friday.
Economists expect that a trade surplus of about $450-million (Canadian) was racked up in March compared with $290-million in February.
Meanwhile, they believe the Canadian economy created about 16,000 jobs in April, down from 43,000 in March. But job creation has been volatile and has regularly missed expectations.
Traders also kept an eye on the deteriorating situation in Ukraine where troops fought pitched gun battles Monday with a pro-Russia militia occupying the eastern city of Slovyansk.
In the past few weeks, anti-government forces have stormed and seized government buildings and police stations in a dozen eastern Ukrainian cities. Authorities in Kiev blame Russia for backing the insurgents.
On the commodity markets, June crude oil in New York fell 28 cents to $99.48 (U.S.) a barrel.
Geopolitical worries pushed gold higher for a second day, up $6.40 to $1,309.30 an ounce, while July copper was off 2 cents at $3.05 a pound.