Toronto (Reuters) – On Wednesday, the Canadian dollar got stronger against the U.S. dollar, even though oil prices went down. This was because encouraging economic data from the U.S., Canada’s biggest trading partner, made people less worried about a possible recession.
After data showed that the U.S. services sector had a surprising comeback in July and that orders for goods made in the U.S. went up strongly in June.
A senior market analyst at OANDA in New York, Edward Moya, said in a note that most of the economic data came in higher than expected. He said this because the service part of the economy seems to be stabilising and price pressures are improving.
About 75% of what Canada sells goes to the United States. This includes oil.
U.S. crude oil futures ended the day nearly 4% lower at $90.66 per barrel. This happened after U.S. data showed that crude and gasoline stockpiles unexpectedly rose last week and as OPEC+ said it would increase its oil output target by 100,000 barrels per day.
After trading between 1.2833 and 1.2891, the Canadian dollar went up 0.3% to 1.2838 per dollar, or 77.89 U.S. cents.
The Canadian trade report for June will be released on Thursday, and the employment report for July will be released on Friday. These reports could show how strong the domestic economy is.
The money markets think that the Bank of Canada will raise its key interest rate by another 50 basis points to 3% next month. That is the top of the so-called neutral range, where monetary policy doesn’t help or hurt the economy.
Most of a deeply inverted curve showed that the yields on Canadian government bonds were higher. The 2-year rate went up 10.8 basis points to 3.218 percent, and the 10-year rate went up 1 basis point to 2.719 percent.
