The Canadian dollar strengthened against its U.S. counterpart on Monday as commodity prices climbed and domestic data showed the first annual increase in consumer spending in five months, adding to evidence of economic recovery.
The loonie was trading 0.3% higher at 1.3345 to the greenback, or 74.93 U.S. cents. The currency traded in a range of 1.3333 to 1.3394.
“The Canadian dollar is having a really nice day today,” said Colin Cieszynski, chief market strategist at SIA Wealth Management. “It is likely due to a rebound in commodity prices.”
Canada is a major producer of commodities, including oil. U.S. crude futures settled 1.8% higher at $41.94 a barrel, supported by an improvement in Chinese factory data, rising energy demand and hopes for an agreement in the United States on more coronavirus-related economic stimulus.
Canadians spent 3.1% more in July than in the same month last year as more sectors of the economy reopened and the government continued to provide benefits, RBC’s consumer spending tracking report showed. It was the first month since February that the report, which uses a proprietary database of debit and credit card transactions, showed a year-over-year increase.
On Friday, data for July showed a larger-than-expected jobs gain and the strongest rate of expansion in purchasing activity in more than two years.
Mark Carney, a former governor of the Bank of England and the Bank of Canada, is helping Canadian Prime Minister Justin Trudeau to craft an economic recovery plan, Bloomberg News reported on Monday.
That could improve investor confidence in Canada because of Carney’s “track record,” Cieszynski said.
Canadian government bond yields were mixed across a steeper curve. The 10-year was up 1.6 basis points at 0.495%, having rebounded from its lowest intraday level in more than four months on July 31 at 0.412%.
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