The Canadian dollar CADUSD strengthened to a one-week high against its U.S. counterpart on Thursday, as the greenback broadly fell ahead of a key central bank conference despite a preliminary domestic estimate showing lower July factory sales.
Better-than-expected economic data in Germany and gains in U.S. mega-cap growth stocks helped push world stock markets
higher, while the U.S. dollar lost ground against a basket of major currencies as investors waited for the Federal Reserve’s annual Jackson Hole, Wyoming, meeting which begins Friday.
Investors had been bracing in recent days for the Fed to double down on its commitment to crushing inflation.
“It seems that many market participants had the same thing in mind, cut dollar longs before the Jackson Hole gathering,” Marc Chandler, chief market strategist at Bannockburn Global Forex, said in a note.
Canadian factory sales likely fell 0.9% in July from June, largely driven by decreases in the petroleum and coal product and primary metal industries, Statistics Canada said in a flash estimate.
Separate data showed payroll employment rose by 114,600 in June, led by gains in the services-producing sector, while average weekly earnings increased at an annual rate of 3.5% after rising 2.5% in June.
The Canadian dollar was up 0.2% at 1.2935 to the greenback, or 77.31 U.S. cents, after touching its strongest since Aug. 18 at 1.2896.
The loonie rose despite a drop in the price of oil, one of Canada’s major exports, as investors braced for the possible return to global markets of sanctioned Iranian oil exports. U.S. crude oil futures settled 2.5% lower at $92.52 a barrel.
Canadian government bond yields eased across much of a flatter curve. The 10-year was down 8.2 basis points at 3.014%, after touching on Wednesday its highest intraday level in nearly five weeks at 3.129%.
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