The Canadian dollar was the strongest currency on the Forex market on Monday. The reason for the currency’s impressive performance was primarily the sharp bounce of crude oil prices, though Canada’s macroeconomic data was also supportive of the loonie.
Crude started Monday extremely weak, tanking about 5% due to concerns that the second wave of the COVID-19 pandemic and the second lockdown in the European Union will limit demand for the commodity. But oil prices rebounded by the end of the trading session, gaining more than 3%, after the news that the Organization of Petroleum Exporting Countries and its allies, including Russia, will postpone the planned decrease of oil production cut targets. The OPEC and several other major oil producers are limiting their output to buoy prices for crude.
Turning towards economic data, the seasonally adjusted IHS Markit Canada Manufacturing Purchasing Managers’ Index slipped to 55.5 in October from 56.0 in September. Nevertheless, the index remained firmly above the neutral 50.0 level of no growth. The index got support from the fastest rise in production volumes since August 2018, which partially offset lower rates of new business growth and job creation. The report commented on the result:
Canadian manufacturers recorded further solid rises in output, new orders and purchases during October, thereby signalling another marked improvement in overall business conditions. An ongoing recovery in client demand led to a further increase in employment. However, the latest survey also revealed intense supply chain pressures as lead times from vendors lengthened further, which contributed to the greatest accumulation of incomplete work since June 2018.
USD/CAD slumped from 1.3309 to 1.3224 as of 22:51 GMT today. EUR/CAD tumbled from 1.5500 to 1.5393. AUD/CAD declined from 0.9344 to 0.9325.
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