By Fergal Smith
TORONTO (Reuters) – The Canadian dollar appreciated against the greenback on Monday, recovering some of last week’s decline as China released stronger-than-expected economic data and Bank of Canada Governor Tiff Macklem, said the Canadian economy was approaching full capacity.
The loonie was trading up 0.3% to 1.2509 against the greenback, or 79.94 cents US, after trading in a range of 1.2501 to 1.2556.
Among the G10 currencies, only the Australian dollar recorded a larger gain. Canada and Australia are major producers of raw materials.
“G10 commodity currencies are largely not deterred by the latest drop in oil prices,” said Simon Harvey, senior currency analyst for Monex Europe and Monex Canada.
US crude oil futures rose 0.1% to $ 80.88 a barrel after hitting their lowest level in 10 days earlier today.
Commodity-linked currencies rose on news of faster-than-expected growth in China’s industrial production and retail sales in October.
The data was “constructive” for commodity demand, Harvey said.
Last week, the loonie fell 0.7%. On Friday it hit its lowest intraday level in more than five weeks at 1.2604.
The Bank of Canada will not raise its benchmark interest rate until the economic downturn is absorbed, which has yet to happen but is getting closer, Macklem said in an opinion piece.
Sales at Canadian factories fell 3.0% in September from August as a semiconductor shortage slashed motor vehicle sales, while wholesale trade for the same month increased 1.0% .
Separate data showed home sales in Canada rose 8.6% in October from September.
The Canadian 10-year gained 4.5 basis points to 1.720%, while the spread between it and the US 10-year rate widened from nearly a basis point to 10 basis points in in favor of the Canadian bond.
(Reporting by Fergal Smith; Editing by Andrea Ricci and Richard Chang)
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