The Canadian dollar closed sharply higher Monday as the American currency weakened amid a mixed reading on manufacturing in the U.S. and China.The loonie rose 0.85 of a cent to 97.3 cents (U.S.).The government-sanctioned China Federation of Logistics and Purchasing said Saturday that its main manufacturing index edged up to 50.8 in May.
Another reading on the sector, HSBC’s monthly purchasing managers’ index for China, fell to 49.2 in May from 50.4 in April. Readings below 50 indicate a contraction.
The contrasting reports could be a sign of a two-speed recovery.
Bigger companies and ones that cater to China’s domestic market are more strongly represented by the official PMI, while smaller private companies focused on exports are better covered by the report produced by HSBC and research firm Markit.
Meanwhile, in the U.S., a widely watched gauge of the American manufacturing sector went into contraction territory during May. The Institute for Supply Management’s Index came in at 49, down from the April reading of 50.7. It was the first time the index slipped below the 50 level since November, 2012.
However, the poor showing reinforced the view that the U.S. Federal Reserve won’t be in a hurry to wrap up its economic stimulus program known as quantitative easing.
The Fed has been buying up $85-billion of bonds every month to keep long-term rates low and encourage lending. It has also been largely responsible for an impressive rally on U.S. stock markets that has gone on practically non-stop since late last year.
Commodity prices rose despite the conflicting Chinese data, with the July crude contract on the New York Mercantile Exchange up $1.48 to $93.45 a barrel after a weak global economic outlook depressed prices more than 2 per cent last week.
July copper gained 4 cents to $3.33 a pound while August bullion on the Nymex rose $18.90 to $1,411.90 an ounce.Report Typo/Error