TORONTO: The Canadian dollar strengthened against its US counterpart on Monday, clawing back some of last week's decline as investors weighed mixed domestic data and Bank of Canada Governor Tiff Macklem said the economy is moving closer to full capacity.
The Bank of Canada will not raise its benchmark interest rate until economic slack is absorbed, which has not yet happened but is getting closer, Macklem said in an opinion piece.
Canadian factory sales fell 3.0% in September from August as a shortage of semiconductors crimped sales of motor vehicles, while wholesale trade for the same month grew by 1.0%, data from Statistics Canada showed.
Separate data from the Canadian Real Estate Association showed that Canadian home sales rose 8.6% in October from September and the average selling price jumped on the month as buyer demand outpaced supply.
The Canadian dollar was trading 0.2% higher at 1.2517 to the greenback, or 79.89 US cents, after trading in a range of 1.2507 to 1.2556.
Canadian dollar steadies near 5-week low
Last week, the loonie declined 0.7% as oil prices fell. Oil is one of Canada's major exports.
The currency touched on Friday its weakest intraday level in more than five weeks at 1.2604.
US crude prices were down 1.2% at $79.79 a barrel on expectations of increasing supply, while higher energy costs and rising COVID-19 cases are seen weighing on demand.
Canadian government bond yields rose across much of the curve, tracking the move in U.S. Treasuries. The 10-year was up 1.6 basis points at 1.691%.
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