The Canadian dollar was little changed against the greenback on Monday, holding near its strongest level in over three years ahead of domestic factory activity data and as optimism about global economic recovery bolstered investor sentiment.
Global equity markets gained and the price of oil, one of Canada’s major exports, rose 0.3 per cent to $63.77 a barrel as investors bullish about the global economic recovery looked ahead to a busy week for U.S. economic data that is expected to underline the strength of the rebound.
Canada’s economy likely grew by 6.5 per cent on an annualized basis in the first quarter, Statistics Canada said on Friday, though economists warned that the current third wave of COVID-19 infections will weigh in the second quarter.
The Markit Canada Manufacturing Purchasing Managers’ index (PMI) for April is due at 9:30 a.m. ET, while the Canadian employment report for the same month is due on Friday.
The Bank of Canada’s signal that it may begin raising interest rates before the U.S. Federal Reserve has lit a fire under the Canadian dollar, but past tightening cycles show faster liftoff may not be sustained, particularly if the loonie overshoots.
The Canadian dollar was nearly unchanged at 1.2292 to the greenback, or 81.35 U.S. cents, having traded in a range of 1.2270 to 1.2317.
On Friday, the loonie touched its strongest intraday level since February 2018 at 1.2262. For the month of April, it was up 2.2 per cent.
Speculators have raised their bullish bets on the Canadian dollar to the highest since February, data from the U.S. Commodity Futures Trading Commission showed on Friday.
Canadian government bond yields were mixed across a flatter curve. The 5-year rose 1.4 basis points to 0.948 per cent.
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