The Canadian dollar soared to its highest level against the U.S. greenback U.S. dollar for the month so far after positive Canadian economic data as well as good news from the U.S and China eased growth concerns.
The Loonie was boosted by data indicating that Canadian industrial capacity utilization increased in the first quarter showing renewed strength in manufacturers after a year of slowing growth.
Meanwhile south of the border, improved data showed U.S. retail sales declined less than expected in May, and producer prices rose more than expected. Retail sales excluding autos, rose modestly in May but sales including autos were lower by a sharp drop in autos due to parts shortages following the Japan earthquake.
China’s inflation accelerated in May, prompting Beijing to hike its reserve ratio for the ninth time since October. Rates were not raised though.
“Normally that’s risk-off, and usually we see a bit of a flight to the dollar on that, but instead today, it seems like the market’s ignoring that,” said Steve Butler, director of foreign exchange trading at Scotia Capital.
“We’ve seen stock futures pointing in the right direction, and with that Canada’s doing a little bit better today …there definitely seems to be a bit more of a positive sentiment today.”
The flurry of data today don’t exactly show a huge surge in growth but on the other hand they can be seen as positive since they may suggest economic growth is at least slowing down at a slow rate, especially China, relieving concerns that the world’s second-biggest economy was heading for a hard landing.
Since its lowest point during the European session, the Canadian Dollar gained over 60 pips against the US Dollar. USDCAD has fallen to 0.9694 after the news from 0.9756.