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TORONTO - The Canadian dollar turned higher late morning Monday on indications that the U.S. economy is bouncing back strongly in the second quarter, following a weather-impacted first quarter.
The loonie climbed 0.16 of a cent to 91.23 cents US as the Institute for Supply Management's index hit 55.2 during April versus the reading of 54 that economists had expected.
Traders also took in data showing that Chinese manufacturing shrank in April for the fourth month in a row and looked ahead to a pair of key Canadian economic reports coming out this week.
The HSBC index of Chinese factory activity showed that Chinese manufacturing only rose by 0.1 point to 48.1 in April, using a 100-point scale on which readings below 50 indicate contraction.
The gauge also fell short of its already weak preliminary result, raising concerns among investors that the slowdown in the world’s second biggest economy is entrenched.
The dollar could find some further movement later in the week from the release of the latest reading on employment on Friday and trade data on Tuesday.
Economists expect the Canadian economy created about 16,000 jobs during April, down from 43,000 jobs in March. But job creation has been volatile and regularly missing economists' expectations.
Meanwhile, it is expected that a trade surplus of about $450 million was racked up during March, up from $290 million in February.
Traders also kept an eye on the deteriorating situation in Ukraine where troops fought pitched gun battles Monday with a pro-Russia militia occupying the eastern city of Slovyansk.
In the last few weeks, anti-government forces have stormed and seized government buildings and police stations in a dozen eastern Ukrainian cities. Authorities in Kyiv blame Russia for backing the insurgents.
On the commodity markets, June crude in New York fell 32 cents to US$99.44 a barrel.
Geopolitical worries pushed gold higher for a second day, up $6.80 to US$1,309.70 an ounce while July copper was off a cent at US$3.06 a pound.
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