Canadian Dollar Surges to Two-Month High on Strong Manufacturing Data

The Canadian dollar rose to its strongest level in two months on Friday, buoyed by domestic manufacturing data and narrowing bond yield gaps.

Canadian factory sales grew 0.1% in June from May, marking the fifth straight month of gains, while sales volumes increased 1.2%, according to separate data. Wholesale trade also rose 2.8% in June.

The loonie traded 0.4% higher at 1.3875 per U.S. dollar, or 72.07 U.S. cents, after reaching its strongest intraday level since June 3 at 1.3865. The currency was up 0.5% for the week, marking its third consecutive weekly gain.

The gap between Canada's 2-year yield and the U.S. equivalent narrowed by about 17 basis points this month to 120 basis points in favor of the U.S. note, according to Shaun Osborne and Eric Theoret, strategists at Scotiabank.