The Canadian dollar rallied against its major counterparts on Tuesday morning in New York as crude oil, the nation’s largest export rose above $76 per barrel.
A surge in stocks driven by a rejected takeover offer for Potash Corp. from the Australian mining giant BHP Billiton Ltd and an upbeat manufacturing sales data for June also attracted traders into the resource-linked loonie.
Crude oil is presently quoted at $76.05 a barrel on the New York Mercantile Exchange, up $0.81 a barrel from its previous close of $75.24 per barrel on Monday. The prices climbed as much as 1.5 percent to $76.33 a barrel earlier in the day.
The board of Potash Corporation of Saskatchewan Inc., the world’s largest fertilizer company, said today that it rejected an unsolicited US$38.6 billion all-cash bid from Australian mining giant BHP Billiton Ltd.
Meanwhile, the Canadian manufacturing sales crept higher in June, defying expectations for a significant decline, official data revealed today. Manufacturing sales edged up 0.1% to C$44.8 billion in June, helped by higher receipts for paper, furniture, and chemical products.
Economists expected manufacturing shipments to decline 0.5% from the 0.4% initially reported in May. The May figure was downwardly revised to a 0.3% increase.
The Canadian dollar appreciated by more than 1 percent to reach a 6-day high of 1.0327 against the US dollar by 10:55 am ET from yesterday’s close of 1.0437. The greenback-loonie pair is currently worth 1.0331 with 1.0220 seen as the next likely target level.
In the U.S., the Commerce Department data showed that housing starts rose 1.7 percent to an annual rate of 546,000 in July from the revised June estimate of 537,000.
Economists had expected starts to rise by 1.1 percent to an annual rate of 555,000 from the 549,000 originally reported for the previous month.
At the same time, building permits fell by 3.1 percent to an annual rate of 565,000 in July from the June rate of 583,000. Building permits had been expected to slip to a rate of 573,000.
Meanwhile, the Labor Department said its producer price index rose by 0.2 percent in July following an unrevised 0.5 percent decrease in June. The modest rebound in prices came in line with the expectations of economists.
In other economic news, the Federal Reserve released a report showing that industrial production increased by 1.0 percent in July following a revised 0.1 percent decrease in June.
Economists had expected production to increase by 0.6 percent compared to the 0.1 percent increase originally reported for the previous month.
Against the Japanese yen, the Canadian dollar climbed to a 4-day high of 82.97 around 10:50 am ET and the next upside target for the pair is likely to be seen around the 83.30 level. The loonie-yen pair, which finished Monday’s deals at 81.82, is presently quoted at 82.94.
Challenging yesterday’s highs, the Canadian dollar climbed to as much as 1.3280 against the euro around 10:35 am ET and the next likely resistance level for the domestic unit is seen at 1.3210. The euro-loonie pair that closed yesterday’s deals at 1.3388 is presently quoted at 1.3299.
The eurozone’s current account balance, which is the widest measure of the region’s trade balance, recorded a deficit of EUR 4.6 billion in June, figures showed today.
A deficit means the 16-nation single currency bloc is a net importer from the rest of the world. The European Central Bank said this was smaller than the EUR 7.4 billion deficit recorded in May.
Meanwhile, the Centre for European Economic Research said today that the economic sentiment indicator for Germany in August fell to 14 from 21.2 points recorded in July. That was much severe than the expected fall to 20 points.