Investing.com - The Canadian dollar rose against its U.S. counterpart on Monday as oil prices jumped after Goldman Sachs (NYSE:GS) said an almost two year run of oversupply had ended.
USD/CAD slid 0.23% to 1.2910 from Friday’s close of 1.2938.
Oil rallied on Monday after Goldman said an almost two year run of oversupply is coming to an end as the market likely flipped into a deficit in May, following various disruptions to global supply.
Oil is a major Canadian export and the currency, nicknamed the loonie, is sensitive to oil price fluctuations.
The Canadian dollar received an additional boost as some production restarted at oil sands facilities in the province of Alberta following a wildfire.
On Friday, Canadian Prime Minister Justin Trudeau visited the region to view the damage from the devastating wildfire, which has weakened the outlook for Canada's economy.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, eased 0.13% to 94.47, still not far from Friday’s highs of 94.84, the strongest level since late April.
The dollar strengthened on Friday as stronger-than-expected reports on U.S. retail sales and consumer sentiment soothed investor concerns over the strength of the economy.
The Commerce Department reported that retail sales jumped 1.3% in April, the largest monthly increase since March 2015.
The robust data also rekindled expectations that the Federal Reserve could raise interest rates sooner than anticipated.
In contrast the Bank of Canada is expected to keep interest rates on hold until the latter half of 2017.
A report on Monday showed that manufacturing conditions in the New York region contracted for the first time in three months in May, as new orders and shipments turned negative.
The Federal Reserve Bank of New York said that its general business conditions index fell to -9.0 this month from 9.6 in April. Analysts had expected the index to decline to 6.5.