TORONTO: The Canadian dollar strengthened to a five-week high against its US counterpart on Wednesday, boosted by optimism on a NAFTA trade deal and gains on Wall Street, as investors grew less fearful of Sino-US trade tensions.
At 4 p.m. EDT (2000 GMT), the Canadian dollar was trading 0.3 percent higher at C$1.2773 to the greenback, or 78.29 US cents. The currency touched its strongest level since Feb. 27 at C$1.2758.
“Sentiment changed yesterday following positive headlines regarding the NAFTA negotiations,” said Mazen Issa, senior FX strategist at TD Securities.
Mexico, Canada and the United States have made good progress in their bid to rework the North American Free Trade Agreement but still have work to do, Canadian Foreign Minister Chrystia Freeland said on Wednesday.
Late strength on Wall Street added to support for the loonie, Issa said. Wall Street stock indexes staged a comeback to close around 1 percent higher as investors turned their focus to earnings and away from the trade conflict between the United States and China, which slammed shares in early trade.
Canada’s commodity-linked currency tends to be sensitive to movement in stock markets due to the signal it sends about the outlook for growth.
The price of oil, one of Canada’s major exports, pared losses as a surprise draw in US crude stockpiles offset trade tensions.
US crude oil futures settled 0.2 percent lower at $63.37 a barrel.
Toronto homes sales tumbled 39.5 percent in March from the previous year, as tighter mortgage rules and higher borrowing costs dampened demand, data showed.
The Bank of Canada has raised interest rates three times since July. But recent data pointing to slower first-quarter growth than the central bank has expected could forestall further interest rate hikes.
“It may require a bit more patience on the policy front,” Issa said.
Canadian trade data for February is due on Thursday and the March employment report is due on Friday.
Canadian government bond prices were lower across the yield curve in sympathy with US Treasuries. The two-year fell 3 Canadian cents to yield 1.815 percent and the 10-year declined 22 Canadian cents to yield 2.177 percent.
Source: Brecorder
