TORONTO (Reuters) - The Canadian dollar shot to its highest level against the greenback in more than seven months on Tuesday, drawing support from upbeat U.S. economic data that whetted investors’ appetite for risk.
By mid-afternoon, the currency touched C$1.1163 to the U.S. dollar, or 89.58 U.S. cents, which marked its highest level since October 8. It was also well above the overnight low of C$1.1356 to the U.S. dollar, or 88.06 U.S. cents.
By 2:55 p.m. EDT, the currency had retreated slightly to C$1.1190 to the U.S. dollar, or 89.37 U.S. cents, but was still up from C$1.1235 to the U.S. dollar, or 89.01 U.S. cents, at Monday’s close.
The climb by the Canadian dollar started early in the session when data from the United States showed that consumer confidence rose in May to its highest level in eight months.
The confidence data was the latest in a growing line of reports that have shown improved U.S. economic growth and weighed on the safe-haven status of the greenback for weeks, allowing the Canadian dollar to rally from the four-year low it hit in early March.
“We are seeing some risk aversion being taken off the table so that’s taken some of the bid tone out of the U.S. dollar,” said Charmaine Buskas, senior economics strategist at TD Securities.
“Investors are clearly getting more comfortable with the U.S. outlook on the back of that consumer confidence number, so that is helping the Canadian dollar sustain a rally.”
Buskas also said the price of oil, a key Canadian export, was helping the Canadian dollar’s rally as oil prices were boosted by comments that demand has picked up.
Reporting by Frank Pingue; editing by Rob Wilson