The Canadian dollar bounced against a weaker greenback on Wednesday to its strongest level in about a week, bolstered by further gains in crude prices, better-than-forecast Canadian manufacturing data and an unexpected fall in U.S. inflation.
Factory sales rose for the third straight month in July, up 1.7 percent, as sales rose in the motor vehicle parts and assembly industries. This was stronger than the 1 percent increase economists had been forecasting. May and June sales data were also revised higher.
“The data flew under the radar, because everyone is waiting for the Fed. But I think it’s actually pretty decent overall,” said Greg Moore, senior currency strategist at RBC Capital
Markets, noting it was the latest in a string of respectable data that bucked fairly weak market expectations.
“(The data) again seems to have maybe reduced expectations that the Bank of Canada will in fact cut again before the end of the year.”
U.S. crude settled nearly 6 percent higher, following an unexpected decline in U.S. stockpiles. The loonie is typically sensitive to price moves in oil because of Canada’s position as a major exporter of the commodity.