TORONTO (Reuters) - Canada’s dollar firmed versus the greenback on Thursday after data showed the pace of growth in the U.S. manufacturing sector picked up modestly in October, while consumer confidence rose to its highest level in more than four years.
The currency rallied to as high as C$0.9962 to the U.S. dollar, or $1.0038, from around C$0.9982, or $1.0018, immediately before the data releases.
It had already been reversing early losses on positive signs on the U.S. labor market a day before closely watched North American employment data is released.
“(The Canadian dollar) seems to be taking it relatively positively on the back of the significant uptick in risk sentiment, so equities are obviously rallying very strongly and the Canadian dollar is moving ... quite smartly,” said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.
The currency, which often tracks the direction of U.S. equities, followed Wall Street higher though U.S. market participation remained low as investors continued to deal with the aftermath of the massive storm Sandy. .N
At 11:05 a.m. (1505 GMT), the Canadian dollar was at C$0.9972, or $1.0028, compared with C$0.9990, or $1.0010, at Wednesday’s North American close.
Stretch said that for the next 24 hours the currency was likely to hold between C$0.9930 and C$1.0020.
The currency felt some pressure after weak Canadian gross domestic product data in the previous session.
Data on Thursday also showed Canadian manufacturing growth slowed for a fourth straight month in October and hit a nine-month low, indicating that the third quarter’s underwhelming economic performance may continue into the end of the year.
“The bigger focus will still be on Friday’s employment reports from both the U.S. and Canada. We usually see a quiet day ahead of that,” said Greg Moore, a foreign exchange strategist at TD Securities.
Canada likely added very few jobs in October after back-to-back bumper gains in the previous two months, a Reuters poll showed.
In the United States, U.S. job growth likely picked up as well, but not enough to prevent the unemployment rate from rising off a near four-year low.
The price of government debt drifted lower across the curve after the encouraging data, with the two-year bond down 2 Canadian cents to yield 1.084 percent, and the benchmark 10-year bond falling 19 Canadian cents to yield 1.804 percent.
Additional reporting by Alastair Sharp; Editing by Peter Galloway