The Canadian dollar strengthened against its U.S. counterpart on Monday, with the currency rebounding from an earlier two-week low as a rally on Wall Street overshadowed domestic data showing a deeper-than-expected plunge in April factory sales.
The loonie was trading 0.2 per cent higher at 1.3557 to the greenback, or 73.76 U.S. cents. The currency, which fell 1.2 per cent last week, touched its weakest intraday level since June 1 at 1.3685.
“I think the loonie has just been following the overall sentiment in the markets,” said Hendrix Vachon, a senior economist at Desjardins.
Wall Street jumped following an announcement by the U.S. Federal Reserve regarding its corporate bond purchasing program that boosted investor confidence, which had been wavering amid a spike in new COVID-19 cases.
The price of oil, one of Canada’s major exports, rose as signs fuel demand was recovering and that OPEC+ members were complying with a production cut deal outweighed fears that new coronavirus infections could further slow the global economy. U.S. crude oil futures settled 2.4 per cent higher at $37.12 a barrel.
Canadian factory sales fell by 28.5 per cent in April from March on a record decrease in motor vehicle assembly, as well as a decline in petroleum and coal products, Statistics Canada said. Analysts had forecast a 20 per cent decrease in the value of shipments.
Separate data, from the Canadian Real Estate Association, showed that Canadian home sales rebounded by a record 56.9 per cent month-over-month in May, when lockdowns to help contain the coronavirus pandemic eased, after plunging in April.
Canadian government bond yields were mixed across a flatter curve, with the 10-year down 1.8 basis points at 0.516 per cent. The 10-year yield touched its lowest intraday since May 15 at 0.468 per cent.
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