As the economic outlook for commodity-driven nations like Canada was boosted by positive Chinese data the ‘Loonie’ edged up to a five-week high against the ‘Greenback’.
The Canadian Dollar Exchange Rate was in the region of 0.9874 against the US Dollar as of 14:50 pm GMT
Yesterday the National Bureau of Statistics and Chinese Federation of Logistics and Purchasing revealed that manufacturing in China, the world’s second largest economy and largest consumer of energy and metals, reached an 11 month high.
In March Chinese manufacturing PMI rose from 50.1 to 50.9, creeping away from the 50 mark which separates growth from contraction.
The manufacturing gauge has now posted results above 50 for the past six months.
While this result is positive, some industry experts are urging caution. For example, according to chief economist Liu Ligang; ‘The official PMI figures suggest that the current economic rebound remains fragile and could falter with tightened monetary policy conditions.’
However, this result was upbeat enough to push the Canadian Dollar 0.4 per cent higher against the US Dollar. The currency also gained on several of its other most traded peers.
As one industry expert noted: ‘Australia, China and reduced fears in Europe – those are the drivers of the Loonie over the last couple of days. To the extent we see positive data out of emerging markets and reduced fears out of Europe, the Canadian Dollar is benefitting.’
Although manufacturing PMI and unemployment data for the Eurozone hint at the region’s economic downturn deepening, risk-aversion was tempered as Cypriot official met with representatives from the European Union and the International Monetary Fund in order to seek easier bailout terms for the nation.
Meanwhile, over in Australia the Reserve Bank opted to hold its key benchmark rate at 3 per cent, strengthening the Down-under Dollar.
This week the most significant home-grown cause of ‘Loonie’ volatility is likely to be Friday’s Canadian employment data, including unemployment rate and employment change.
Economists are expecting the Canadian economy to have added 5,000 jobs last month.
Last month Canadian employment data wildly exceeded forecasts. If the same thing occurs this month the ‘Loonie’ could climb further.
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