Canadian "loonie" dollar coins. December, 2007.Larry MacDougal/The Globe and Mail
The Canadian dollar gained more than a cent on improved investor sentiment about the state of the global economy and higher commodity prices.
The loonie added 1.11 cents to close at 102.05 cents (U.S.) as commodities also made gains.
Oil prices gained $2.50 to $87.88 (U.S.) a barrel on the New York Mercantile Exchange. The December gold contract added $15.40 to $1,758 an ounce and copper was up 2 cents at $4.03 per pound.
Key Canadian data to be released this week will be Friday's consumer price report, which will give traders a notion of how much inflation is affecting consumer prices.
"People are paying close attention to that because after last week you definitely get the impression that Mark Carney is under no pressure to raise rates," said Gareth Watson, vice president of investment management at Richardson GMP Ltd.
"If inflation appears to be a lot worse than expected, though, he might have to keep rate hikes on his radar screen."
However, Mr. Watson added, the currency traders are already pricing in the assumption that there will be no rate hike until 2012 at the earliest.
Other data to be released this week includes Canadian manufacturing data for June on Tuesday and wholesale sales on Wednesday, which will round out second-quarter statistics and could confirm little growth during the quarter.
Meanwhile, data out of the U.S. on Monday showed manufacturing in New York has worsened in August for the third straight month.
"In recent months, poor Empire [manufacturing]numbers would have been enough to send markets sharply lower but were generally ignored today suggesting that expectations have already been adjusted lower and the weakest hands have already been shaken out," said market analyst Colin Cieszynski.
Another report indicated that foreign investors cut their holdings of U.S. Treasury debt in June for the first time in more than a year. The decline came at a time of anxiety about whether the United States would raise its borrowing limit.
China, the biggest buyer of U.S. Treasury debt, increased its investment for a third straight month. But Japan, the second-largest buyer, along with Brazil, Russia, Hong Kong, and a group that includes the Bahamas, Bermuda, the Netherlands and the Cayman Islands cut their investments. Overall foreign holdings dropped 0.4 per cent to $4.5-trillion.