TORONTO (Reuters) - The Canadian dollar notched its biggest rally in six weeks against the greenback on Thursday as data showing an unexpected increase in Chinese exports raised hopes for the global economy, with the loonie rebounding from an earlier two-week low.
World shares .WORLD rose as the Chinese data stoked speculation China could recover from its coronavirus lockdown quicker than first thought and support global growth in the process.
The Canadian dollar “has been mostly tracking risky assets today, equities in particular,” said Alvise Marino, FX strategist at Credit Suisse in New York.
Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude oil futures settled 1.8% lower at $23.55 a barrel as global supply and demand worries erased earlier gains, while the U.S. dollar lost ground against a basket of major currencies as another report showed millions more Americans were unemployed.
The Canadian dollar CAD=D4 was trading 1% higher at 1.4000 to the greenback, or 71.43 U.S. cents, its biggest advance since March 26.
The loonie earlier touched its weakest intraday level since April 23 at 1.4173. Since the start of the year the currency has fallen more than 7%.
The Canadian dollar will regain some lost ground over the coming year, along with a potential recovery in the price of oil and in the global economy, after it was crippled by the COVID-19 pandemic, a Reuters poll showed.
In domestic data, the Ivey Purchasing Managers Index (PMI) index fell to a record low of 22.8 in April, a month when non-essential business activity was halted across the country due to the coronavirus crisis.
Canada’s jobs report for April is due on Friday and is expected to show Canadian employment plunged by 4 million in April on top of the 1 million jobs the economy shed in March.
Canadian bond yields eased across a flatter curve in sympathy with U.S. Treasuries on Thursday. The 10-year yield CA10YT=RR fell 6.4 basis points to 0.550%.
Reporting by Fergal Smith; Editing by Andrea Ricci
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