Canadian Dollar Erases Earlier Losses Against US Peer Following Manufacturing Data

The Canadian dollar moved slightly lower on Wednesday against the US dollar and the euro. The Canadian currency erased most of its earlier losses following strong manufacturing sales data in Canada.

Statistics Canada released its report for manufacturing sales in December 2016, which said that sales improved more than expected for the second month in a row. Increased sales of petroleum products and transportation equipment led sector gains.

Canada’s manufacturing sales rose 2.3% in the last month of 2016, which far exceeded expectations for a gain of 0.2%. The report also revised data for November to 2.3%, from an initial value of 1.5%. Manufacturing sales gains pour directly into economic growth, which improved the outlook for the gross domestic product growth in the fourth quarter.

Sales of petroleum and coal products, two of Canada’s main products, gained 11.6% as refineries came out of maintenance that happened in September and October. Transportation equipment sales also increased by 7.4%, led by gains in military vehicles sales. The stronger manufacturing sales reduced inventories by 0.3% in December.

Traders are now looking forwards data releases in the United States. The number of jobless claims comes out tomorrow, alongside data for building permits and a new reading Philadelphia Federal Reserve’s manufacturing index.

USD/CAD traded at 1.3083 as of 18:35 GMT on Wednesday, from 1.3115 at 14:00 GMT, the pair’s strongest level since February 13. USD/CAD opened trading today at 1.3085.

EUR/CAD was at 1.3850, after touching 1.3869 at 16:40 GMT, the pair’s highest rate in two days. EUR/CAD started the day at 1.3832.

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