Oil prices have retraced today, but that has not prevented the Canadian dollar from strengthening against the greenback.
This is partially due to the fact that business confidence improved modestly in the second quarter. Up until now, the Canadian dollar has had a hard time rallying because of fears that the slowdown in the US economy would spillover to the Canadian economy. However the summer Business Outlook Survey from the Bank of Canada indicates that this concern is not shared by Canadian businesses which coincide with Friday’s sharp rise in the IVEY PMI number. Building permits were also better than expected, reflecting continued strength in the Canadian housing market. Good news also came out of Australia with construction sector PMI improving, but that has failed to prevent the Australian or New Zealand dollars from being hit by US dollar strength.