The Canadian dollar touched a 10-day high against the U.S. dollar on Monday as traders responded to signs the country’s industrial pulse is stabilizing after a difficult summer.
The move followed a run of domestic releases that painted a slightly brighter picture for factories and goods channels even as overall conditions remain mixed.
Statistics Canada said manufacturing sales rose 2.5 percent in July from June, led by motor vehicles and petroleum and coal products.
The increase put nominal sales at 70.3 billion Canadian dollars and eased concerns that output would remain stuck in a midyear slump.
The lift in autos dovetails with a steadying of parts supply and a bump in assembly schedules, while energy-related gains reflected firm refining margins and throughput.
Wholesale trade also advanced in July, with sales excluding petroleum categories up 1.2 percent to 86.0 billion dollars. Four of seven subsectors reported gains, including motor vehicles and building materials, and volumes rose 0.8 percent.
Together with stronger manufacturing receipts, the wholesale data suggest goods flows are finding a floor after months of tariff-related and demand-side headwinds.
Survey evidence is beginning to echo that turn. S&P Global’s Canada Manufacturing PMI improved to 48.3 in August from 46.1 in July, still below the 50 threshold that separates expansion from contraction but the firmest reading since January.
Softer declines in new orders and output drove the improvement, pointing to a slower pace of contraction and tentative stabilization.
A broader activity gauge told a similar story. The Ivey Purchasing Managers Index slipped to 50.1 in August on a seasonally adjusted basis, the lowest in three months and consistent with near-flat overall activity.
That reading underscores how uneven the recovery remains across sectors and regions despite the better tone in factory and wholesale numbers.
Housing data added a modest momentum to sentiment as the Canadian Real Estate Association reported that seasonally adjusted home sales edged up 1.1 percent in August, the fifth straight monthly increase and the strongest August since 2021.
While prices remain soft in many markets, the sales trend suggests demand is firming ahead of the fall listing season.
For currency markets, the combination of firmer hard data and less-negative surveys was enough to nudge the loonie higher, even as investors weigh the global backdrop and the next policy signal from the Bank of Canada.
Historically, higher crude prices and an improving goods outlook tend to support the currency given Canada’s export mix.
The durability of the rally will hinge on whether factories can convert improved order books into sustained production and whether wholesalers keep turning inventory as financing conditions evolve.
Producer-level indicators through September will reveal whether July’s bounce was a one-off or the start of a better trend.
Any further narrowing in the gap between new orders and output in the PMI would strengthen the case that the worst is past for manufacturers.
On the policy front, traders will parse the central bank’s language for clues on the path of rates into year end, given the tug-of-war between cooling demand in services and the nascent stabilization in goods.
For businesses, a steadier goods cycle could ease cash-flow pressure that built up when orders slowed and inventories piled higher earlier in the year.
For households, a healthier factory and wholesale backdrop tends to support employment in transport, logistics and parts of retail tied to durable goods.
For markets, the near-term question is whether the loonie’s latest bounce stalls at technical resistance or extends on any follow-through in September data.
If momentum in factories and wholesale channels holds, the currency’s floor may be a little firmer than it looked just a few weeks ago.
