Loonie closes above par on positive data

Manufacturing data Wednesday suggested the global economy is strengthening, which increased risk appetite and helped the Canadian dollar close above par with its U.S. counterpart for the first time since Oct. 31.

The dollar pared some of its earlier gains but ended the day at US$1.0009, up 37 basis points.

“The loonie’s doing a bit better on the general positive outlook,” Michael O’neill, vice-president of foreign-exchange trading at RJOFX Canada, a unit of RJ O’brien & Associates Inc., told Bloomberg.

“That’s partly from the China (PMI) data last night and also in part because Europe hasn’t cratered. There’s also a bit more optimism surrounding the U.S. economy. What’s good for the U.S. is good for global growth; Canada is along for the ride.”

Better-than-expected manufacturing PMI reports from China, Europe and the U.S. gave most global markets a boost on Wednesday. In Toronto, the benchmark S&P/TSX composite index rose 65.51 points, or 0.53%, to 12,517.66. Eight of the 10 sub-indexes advanced, led by health care, up 3.72%, and technology, which gained 1.41%.

“Manufacturing PMI numbers from around the world exceeded expectations, and showed that many economies continue to accelerate, particularly the U.K., Italy and South Korea,” analyst Colin Cieszynski of Cmcmarkets wrote in an afternoon note, adding that while the headline U.S. number missed expectations, it was still at its highest level since June.

The price of crude oil slipped US87¢ to US$97.61 a barrel on Wednesday, while gold gained US$9.30 to US$1,747.10 an ounce.

The Dow Jones industrial average closed the day at 12,716.46, a gain of 83.55 points, or 0.66%, and the Nasdaq composite rose 34.43 points, or 1.22%, to 2,848.27.

Canada’s junior Venture exchange edged up 5.56 points, or 0.34%, to 1,637.31.

“Canada is very much tied to global growth,” Jennifer Radman, a money manager at Caldwell Investment Management Ltd. in Toronto, told Bloomberg.

“Over the last several months, there’s been a pick-up in economic numbers. In China, there’s more and more confidence they’re not going to have this hard landing some people were talking about.”

Valeant Pharmaceuticals accounted for the surge in the S&P/TSX’S health-care sub-index on Wednesday. It gained 3.93% to $50.47 after announcing it will buy Pro

biotica Laboratorios Ltda., based in Sao Paulo, for $86 million.

The technology sub-index benefited from a 3.01% gain in CGI Group Inc., which rose to $20.86 despite reporting that first-quarter revenue fell 16%.