Canadian Dollar Rallies on Back of Supportive Fundamentals

The Canadian dollar rallied today amid positive macroeconomic data, a rally of prices for crude oil, and hopes that the trade agreement with the United States can still be preserved.

Canada’s manufacturing sales rose 1.6% in August. That was an unexpectedly good reading considering that the sales dropped 2.6% in July and experts were expecting another drop in August, though just a minor one by 0.1%.

US inventories of crude shrank last week more than analysts had predicted. That initiated a rally of oil prices, though crude is struggling to maintain gains right now. Crude oil is Canada’s main export commodity, therefore the Canadian dollar often follows moves of crude.

The loonie also had some support from the news that the deadline for the negotiations between the United States, Canada, and Mexico about the North American Free Trade Agreement was extended from December to March 2018. While that gives the participants more time to consider proposals of their peers and to come up with new offers, concerns remain that US demands will remain too outlandish for Canada and Mexico to stomach.

USD/CAD slid from 1.2519 to 1.2490 as of 15:47 GMT today. CAD/JPY rallied from 89.56 to 90.45. CAD/CHF climbed from 0.7808 to 0.7860.

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