Canadian Dollar Rallies After Positive COVID-19 Vaccine News

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The Canadian dollar strengthened against its U.S. counterpart on Monday as positive results from a COVID-19 vaccine trial boosted investor sentiment and domestic data showed manufacturing sales climbing in September.

Wall Street <.SPX> rallied after Moderna Inc said its experimental vaccine was 94.5% effective in preventing COVID-19 based on interim data from a late-stage trial. It was the second U.S. company in a week to report positive results from a trial.

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 prices were up 4.6% at $41.99 a barrel, while the Canadian dollar was trading 0.4% higher at 1.3080 to the greenback, or 76.45 U.S. cents.

The currency traded in a range of 1.3065 to 1.3141. Last week, it fell 0.6% as global coronavirus cases climbed.

Canadian factory sales increased by 1.5% in September from August on higher sales in the wood industry, as well as the chemical industry, Statistics Canada said.

“Conditions in the factory sector have improved rapidly since Q2 (the second quarter),” said Ryan Brecht, a senior economist at Action Economics. “Producers face remarkably lean inventories and rebounding demand in many industries above pre-pandemic levels.”

Separate data, from the Canadian Real Estate Association, showed that Canadian home sales fell 0.7% in October from September, edging back from the previous month’s all-time record.

Canadian government bond yields were higher across much of a steeper curve in sympathy with U.S. Treasuries, with the 10-year yield up 2 basis points to 0.748%. On Friday, it touched its highest intraday level in seven months at 0.813%.

– Reuters

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