C$ Strengthened as Manufacturing Data Support BOC’s Rate Hike

The Canadian currency was able to gain strength against the American dollar yesterday as oil prices increased to 3-½-year highs and the domestic manufacturing data lifted up the Bank of Canada’s forecast to implement interest rate hike next week.

At 1:33 AM GMT, the Loonie trades at 0.4 percent higher at $1.3138 to the U.S. dollar or 76.12 U.S. cents. The Canadian dollar traded in the range of $1.3133 to $1.3207. The country’s manufacturing industry grew this month to its highest momentum in more than seven years. While the IHS Markit Canada Manufacturing Purchasing Managers’ Index escalated to a seasonally adjusted 57.1 in June compared 56.2 in May.  The domestic data continued to strengthen despite slow progress in North American Free Trade Agreement (NAFTA) negotiations as well as trader war with the United States.

On Monday, the Trump administration told that Canada’s plan to retaliate tariffs worth  $16.6-billion on US products against US duties on Canadian imports on steel and aluminum will not bring any positive impact to its economy. During the July 11 announcement, the possibility of an interest rate increase accelerated almost to 80 percent versus 50 percent prior the hawkish remarks by BoC Governor Stephen Poloz at the press conference last week.

The domestic figures had an unexpected surge on Friday, showing the domestic economy expanded in April alongside the business optimism. Moreover, the CAD reached its strongest stance at  $1.3131 within two weeks. American crude oil futures touched 0.3 percent higher at $74.14 per barrel and oil includes on Canadian major exports.

The greenbacks nearly declined to 0.5 percent against the basket of major currency prior the Independence Day holiday on July 4. On the other hand, the stocks on Wall Street felt pressured by the downturn of technology stocks. Canada’s government bond prices came in higher above the flatter yield curve, as the Canadian cents was two-year up to 2.5 versus yield to 1.898 percent and 10-year rose 22 CAD cents to yield 2.142 percent. The 10-year yield arrived at its highest intraday zone of 2.204 percent. Also, Canadian employment report for last month and trade figures in May are scheduled to be issued on Friday.