Canadian Dollar Soars To Multi-day Highs Euro And Yen
In early European deals on Friday, the Canadian dollar strengthened to multi-day highs against its European and Japanese counterparts as the crude oil prices rose toward $72 a barrel today on bullish U.S. economic data and supply concerns in OPEC member Nigeria.
The Canadian dollar also advanced against the U.S. currency, but it fell to a 1-week low against the aussie.
The reading on the Philadelphia Federal Reserve business activity index was the highest since September 2008, and the Conference Board’s forward-looking measure of the U.S. economy posted its biggest increase in five years in May.
On jobs, the number of U.S. workers filing new claims for jobless benefits rose last week, but the number of people staying on the benefits rolls fell for the first time since January, data showed on Thursday.
Reflecting fresh optimism for an economic turnaround, Asian equity markets snapped four days of losses, following a rally on Wall Street, where the Dow and S&P 500 broke a three-day losing streak following positive job and regional manufacturing reports.
U.S. crude rose 45 cents to $71.82 a barrel at 3:08 am ET, and London Brent crude gained 45 cents to $71.51.
Consumer prices in Canada rose unexpected on a yearly basis in May, but the pace of the increase slowed from the previous month, according to data released yesterday by Statistics Canada.
Consumer prices inched higher by a 15-year low of 0.1% in the 12 months to May 2009, down from the 0.4% increase in April. Economists were looking for consumer prices to slip 0.2%.
On a monthly basis, prices were up 0.4% in May after easing 0.1% in April.
The Canadian dollar that closed yesterday’s trading at 1.1329 against the U.S. currency rose to 1.1292 in early deals on Friday. The next upside target level for the Canadian dollar is seen at 1.124.
During early deals on Friday, the Canadian dollar gained against the Japanese yen. Currently, the loonie-yen pair is trading at a 3-day high of 86.06, compared to Thursday’s close of 85.29. If the pair climbs further, it may likely target the 86.6 level.
The Bank of Japan today released the minutes of its policy board meeting held May 21-22. Minutes of the meeting showed that some Bank of Japan policy board members said the timing of the termination of temporary measures to increase liquidity depends on market conditions.
“Some members said that whether or not the bank would continue with various temporary measures, which were to be terminated on or after Sept. 30, should be determined based on close examination of developments in financial markets and corporate financing,” the summary of meeting discussions said.
The Canadian dollar advanced against the euro after falling to 1.5782 at 2:00 am ET Friday. The euro-loonie pair that closed yesterday’s trading at 1.5751 is presently quoted at 1.5690. This set a 2-day high for the loonie. The next resistance level for the Canadian currency is seen at 1.561.
The euro declined after a report showed that the German PPI declined further in May. The index dropped 3.6% year-over-year in May, after falling 2.7% in April. This was the lowest annual rate of PPI since April 1987. The producer prices figure in May came in line with economists’ expectations.
On a monthly basis, the PPI remained unchanged in May, compared with a 1.4% fall in the preceding month.
Adding to euro’s slide, another report showed that Italy’s seasonally adjusted jobless rate rose to 7.3% in the first quarter from an upwardly revised 7% recorded in the final quarter of the previous year. The jobless rate, which is reportedly the highest in three years, matched economists’ expectation.
In early trading on Friday, the Canadian dollar fell to a 1-week low of 0.9133 against the Aussie. This may be compared to Thursday’s close of 0.9047. On the downside, the Canadian currency may likely target a multi-month low of 0.9118, if it weakens further.
Traders now look forward to the Canadian retail sales report for April, which is due at 8:30 am ET.
