Canadian dollar jumps more than a penny as stocks rally
By Ka Yan Ng
TORONTO (Reuters) - Canada's dollar finished more than a penny higher against the U.S. currency on Monday, as a solid rally in equity markets overcame disappointing U.S. manufacturing data.
Toronto's main stock market index notched its highest close in more than a week, driven by bargain-hunting, optimism over the euro zone debt crisis and acquisition activity on both sides of the border.
U.S. stock indexes rallied for a third day on Monday as investors saw Google's $12.5 billion offer for Motorola Mobility as a signal to jump back in after weeks of sharp selling. As well, Toronto-Dominion Bank announced a deal to buy MBNA Canada's $8.6 credit card portfolio from Bank of America.
"At the moment we're just ignoring the data and just looking at the bounce in equities. I would have expected a more negative reaction in the Canadian dollar to the numbers, frankly, but we didn't get that," said Shaun Osborne, chief currency strategist at TD Securities.
A gauge of manufacturing in New York state dented sentiment briefly, sending the Canadian dollar toward a session low that nearly matched Friday's close.
The data showed the sector unexpectedly contracted for the third month in a row in August with the general business conditions index sagging to minus 7.72 from minus 3.76 the month before. Economists polled by Reuters had expected a reading of zero.
But the currency bounced back fairly quickly, with the focus on riskier assets, particularly the stock markets, and the currency ended the session not far off its 200-day moving average.
The Canadian currency finished at C$0.9799 to the U.S. dollar, or $1.0205, up from C$0.9907 to the U.S. dollar, or $1.0094, at Friday's North American close. Continued...