The Canadian dollar strengthened
to a near three-month high against its U.S. counterpart on
Monday as liquidity measures introduced by the Federal Reserve
during the coronavirus crisis weighed on the greenback.
The Canadian dollar was trading 1.5% higher at 1.3571
to the U.S. dollar, or 73.69 U.S. cents. The currency touched
its strongest intraday level since March 9 at 1.3558.
"It just seems like everyone wants to sell (U.S.) dollars
right now," said Bipan Rai, North America head of FX strategy at
CIBC Capital Markets. "The Fed has implemented many measures to
make sure that the world is awash in U.S. dollars."
In March, when financial markets were crashing, the
greenback was greatly sought after.
Global stocks rallied on Monday, bolstered by hopes
of economic recovery. Canada runs a current account deficit and
is a major producer of commodities, including oil, so the loonie
tends to benefit from rising risk appetite.
"We've probably got enough juice to test the 1.34 handle in
dollar-CAD," Rai said
Canadian manufacturing activity contracted at a less severe
pace in May than in April. The IHS Markit Canada Manufacturing
Purchasing Managers' index (PMI) rose to a seasonally adjusted
40.6 from a record low 33.0.
U.S. crude oil futures were up 0.3% at $$35.60 a
barrel, supported by reports that OPEC and Russia were closer to
a deal on extending oil cuts.
Bleak domestic GDP data on Friday has been taken in stride
by the market, with economists turning attention to how fast the
economy can recover from the coronavirus crisis and the
potential level of fiscal and monetary policy support.
A Bank of Canada interest rate decision is due on Wednesday,
when Tiff Macklem will take over as governor.
Canada's 5-year yield was little changed at
0.394% on Monday.
(Reporting by Fergal Smith; editing by Grant McCool
Editing by Nick Zieminski)' />