TORONTO (Reuters) - The commodities-linked Canadian dollar firmed against the U.S. dollar on Monday after touching a three-month low in the previous session, tracking natural resource prices, which rose on the back of encouraging data out of China.
Chinese industrial output, exports and retail sales all beat expectations in October, while inflation eased more than expected. The news gave copper prices a boost, while recent data showing China’s implied oil demand surged last month offered support for crude oil prices.
The results offered a reassurance that the economy for one of the world’s largest consumers of copper and oil -- among other commodities -- was turning the corner. <O/R><MET/L>
“On the face of it, the Chinese numbers overnight were probably a little bit better, suggesting some strength in the export markets,” said Shaun Osborne, chief currency strategist at TD Securities, but cautioned that more data from China, as well as the United States and Europe were needed to suggest traction in the global economic recovery.
Bond markets closed in the United States and Canada for Veterans Day and Remembrance Day respectively, and both countries’ governments were also closed, meaning that there would be no release of official statistical data to drive markets.
“Very little impetus today. In general, we have no data, it’s probably going to be a session of range trading, looking ahead to the events and developments later in the week,” said Osborne.
“It’s going to be a case of still looking at risk appetite generally ... There’s probably a bias toward a more risk-off trading environment, which is going to be good for the U.S. dollar, negative for the Canadian dollar.”
At 9:34 a.m. (1434 GMT), the Canadian dollar was trading at C$0.9993 versus the U.S. dollar, or $1.0007, up from the previous North American session finish of C$1.0013, or 99.87 U.S. cents.
Canada’s dollar was outperforming most other major currencies, but was underperforming its fellow commodities-linked currencies, the Australian and New Zealand dollars.
Osborne said C$0.9985 would be a pivotal point for the currency, and expected to see it test support around the mid-C$.99 range before trading back towards parity. He expected the U.S. dollar to trade higher into the end of this year.
Editing by W Simon