TORONTO – The Canadian dollar was higher against the U.S. currency Monday as risk appetite improved following the release of positive purchasing managers data from China.
The loonie rose 0.13 of a cent to 100.77 cents US as HSBC’s Purchasing Managers’ Index for the world’s second-biggest economy rose to 50.5 in November from October’s 49.5. Any reading above 50 indicates activity is expanding. It was the first time in 13 months that China’s manufacturing sector emerged from contraction.
Meanwhile, traders looked ahead to the Canadian central bank’s next scheduled interest rate announcement on Tuesday. The Bank of Canada is widely expected to keep its key interest rate unchanged at one per cent, reflecting slowing economic conditions in much of the world.
The other key economic event of the week happens Friday when Statistics Canada releases its November employment report. Economists expect the economy created about 7,500 jobs last month.
Commodities were higher with the January crude contract on the New York Mercantile Exchange up 59 cents to US$89.50 a barrel.
Copper prices found slight lift from the Chinese data with the March contract up one cent at US$3.66 a pound. China is the world’s biggest consumer of the metal, which is viewed as a proxy for the global economy as it is used in so many applications.
Bullion gained $5.60 to US$1,718.30 an ounce.
Traders also looked to negotiations aimed at averting the “fiscal cliff,” a combination of tax increases and across-the-board spending cuts set to automatically take place at the first of the year.
The resulting shock would cut economic growth and likely push the U.S. back into recession.
Obama proposes US$1.6 trillion in higher taxes over a decade and heightened presidential power to raise the debt limit. In exchange, Obama proposes $600 billion in spending cuts, including some to Medicare. He also wants $200 billion in new spending to support economic recovery.
House Speaker John Boehner says Obama’s plan isn’t serious. He says Republicans have plenty of ideas, but he’s not giving specifics.
In Europe, Greece was outlining the details of a plan for the country to lower its debt burden by purchasing its bonds back from private-sector investors at lower prices. The details will be presented to the finance ministers of the 17 European Union countries that use the euro at their meeting in Brussels later Monday.