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The Canadian dollar strengthened against its broadly stronger U.S. counterpart on Wednesday, paring some of its 2018 decline as higher oil prices offset domestic data showing a slowdown in manufacturing growth.

The price of oil, one of Canada’s major exports, climbed in choppy trading despite evidence of softer growth in Asia and Europe that could hurt demand for the commodity. U.S. crude oil futures settled 2.5 per cent higher at $46.54 a barrel.

The “bounce in oil prices” has helped boost the Canadian dollar, said Erik Nelson, a currency strategist at Wells Fargo. “CAD is a standout.”

At 4:06 p.m., the Canadian dollar was trading 0.4 per cent higher at 1.3584 to the greenback, or 73.62 U.S. cents, the second-best performance among G10 currencies. The currency touched its strongest level since last Thursday at 1.3570.

Last year, the loonie posted its worst performance since 2015 as expectations dwindled for additional rate hikes in 2019 from the Bank of Canada. The central bank has worried that a plunge in oil prices since October could hurt Canada’s economy.

Data showed that Canada’s manufacturing sector expanded in December at the slowest pace in nearly two years as production growth faltered and export orders stagnated. The IHS Markit Canada Manufacturing Purchasing Managers’ index fell to a seasonally adjusted 53.6 last month, its lowest since January 2017, from 54.9 in November.

Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 0.5 cents to yield 1.865 per cent and the 10-year rising 33 cents to yield 1.926 per cent.

The 10-year yield hit its lowest intraday since December 2017 at 1.871 per cent.

The country’s employment report for December is due on Friday.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 20/05/24 6:02am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
0%0.73464
USDCAD-FX
U.S. Dollar/Canadian Dollar
0%1.36123

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