TORONTO (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday after a Bank of Canada business survey showed widespread negative sentiment, with currency investors looking for evidence of a faster rebound in economic growth.
The loonie CAD= was trading nearly unchanged at 1.3540 to the greenback, or 73.86 U.S. cents. The currency touched its strongest intraday level since June 23 at 1.3520.
“The (FX) market is biding its time,” said Amo Sahota, director at Klarity FX. “It is looking for better economic data to back up a stronger recovery.”
Business sentiment in Canada is “strongly negative” even as coronavirus restrictions have eased, although roughly half the companies surveyed expect their sales to recover to pre-pandemic levels within 12 months, the Bank of Canada’s Business Outlook Survey showed.
Global stock markets .WORLD rallied to four-week highs as investors counted on a revival in China to boost global growth, even as surging coronavirus cases delayed business reopenings across the United States.
Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude CLc1 oil futures settled 2 cents lower at $40.63 a barrel on concern that a spike in coronavirus cases could curb U.S. fuel demand.
Canada’s employment report for June is due on Friday, while Finance Minister Bill Morneau is due to present a fiscal snapshot on Wednesday.
Canada should focus on boosting economic growth after getting pummeled by the COVID-19 crisis, analysts say, even as concerns about the sustainability of its debt are growing, with Fitch downgrading the nation’s rating less than two weeks ago.
Canadian government bond yields edged slightly lower across much of the curve, with the 10-year CA10YT=RR down less than one basis point at 0.548%.
Reporting by Fergal Smith; Editing by Nick Zieminski and Peter Cooney
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