2010.11.1509:56:00UTC+00Canadian Dollar Strengthens Against Majors

The Canadian dollar extended its early European session's rally on Monday morning in New York as crude oil, the nation's largest export, recouped most of Friday's loses.

Crude oil for December delivery is currently trading at $85.39 per barrel on the New York Mercantile Exchange, up 51 cents from its previous close. Prices touched a high of $85.77 earlier in the session.

Crude oil slipped by more than 3 percent on Friday on worries that China would increase borrowing costs to curb inflation, which could potentially cool demand in the world's second largest oil consumer.

In economic news, the Canadian new vehicle sales rebounded in September after a notable drop in the previous month, official data revealed today.

The number of new motor vehicles sold rose 4.2% to 134,845 units in September, according to Statistics Canada. Stronger truck sales helped overall sales beat expectations of a 3.2% percent rise.

The Canadian dollar appreciated by almost 2.3 percent to reach a 5-day high of 82.50 against the yen around 8:20 am ET from Friday's multi-day lows of 80.63. The loonie-yen pair is presently worth 82.30 and a move above the 82.60 resistance could set its strongest level in more than seven weeks.

The yen declined today as Japan's better-than-expected third quarter GDP growth figures prompted investors to dump the safe-haven currency for higher-yielding assets.

Japan's GDP rose 0.9% in the third quarter, following the 0.4% increase in the second quarter. Economists had predicted a 0.6% gain. On an annualized basis, the Japanese economy grew 3.9%, exceeding expectations for a 2.5% rise.

Against the euro, the Canadian currency appreciated by more than 1.1 percent to reach as high as 1.3730 before moving sideways around 9:10 am ET. On the upside, 1.37 is seen as the next likely target level for the loonie.

The euro came under pressure after the revised data from the eurostat showed that Greece budget deficit in 2009 was more than initially estimated.

Athens logged a shortfall of 15.4% of gross domestic product, or GDP, last year. That was revised from 13.6% of GDP estimated in April. Thus, Greece registered the biggest deficit in the currency bloc, pushing Ireland to the second place.

The Canadian dollar climbed to 1.0059 against the US dollar by 9:15 am ET. Thereafter, the loonie started reversing its direction and is currently quoted at 1.0077. The greenback-loonie pair closed last week's deals at 1.01.

In the U.S., the Commerce Department said that retail sales surged up by 1.2 percent in October following an upwardly revised 0.7 percent increase in September. Economists had expected sales to increase by 0.7 percent.

Excluding the 5.0 percent increase in sales by motor vehicle and parts dealers, retail sales increased by a much more modest 0.4 percent in October compared to a revised 0.5 percent increase in the previous month. The increase in ex-auto sales came in line with economist estimates.

Meanwhile, the conditions for New York State manufacturers unexpectedly deteriorated in November, according to a report released by the New York Federal Reserve.

The report showed that the general business conditions index fell to a negative 11.1 in November from a positive 15.7 in October, with a negative reading indicating a contraction in activity in the New York manufacturing sector. Economists had expected the index to remain positive at 11.7.

Looking ahead, the Commerce Department will release its business inventories report for September at 10:00 am ET. Economists expect that business inventories increased by 0.9% during the month, following a 0.6% month-over-month increase in August.

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