TORONTO: The Canadian dollar was steady against its US counterpart on Thursday, holding near an earlier five-week high even as the greenback broadly climbed and data showed a widening of Canada’s trade deficit.
At 9:43 a.m. EDT (1343 GMT), the Canadian dollar was trading nearly unchanged at C$1.2772 to the greenback, or 78.30 US cents.
Canada’s trade deficit in February jumped to C$2.69 billion from C$1.94 billion in January as rail transport problems slashed exports of wheat and canola, Statistics Canada said. Analysts had forecast a C$2 billion shortfall.
“With the Bank of Canada in data dependent mode, this morning’s report is not going to do much to pull them off the sidelines,” Dina Ignjatovic, an economist at Toronto-Dominion Bank, in a research note.
The central bank has raised its benchmark interest rate three times since July to 1.25 percent but has worried about a number of uncertainties, including the impact of past rate hikes on highly indebted Canadians and the outlook for trade.
Chances of an interest rate hike by May slipped to 41 percent from 45 percent before the data, the overnight index swaps market indicated.
Still, the loonie has been boosted this week by optimism on a deal to revamp the North American Free Trade Agreement. It touched its strongest level since Feb. 27 at C$1.2745.
The US dollar rose to a two-week high against a basket of major currencies, encouraged by a rebound on Wall Street and signs the United States may negotiate a resolution to a trade dispute with China.
The price of oil, one of Canada’s major exports, was supported by an easing of trade tensions and a surprise draw in US crude inventories last week.
US crude prices were up 0.90 percent at $63.94 a barrel.
Canadian government bond prices were mixed across a steeper yield curve, with the two-year up 0.5 Canadian cent to yield 1.815 percent and the 10-year falling 10 Canadian cents to yield 2.188 percent.
Canada’s employment report for March is due on Friday.
Source: Brecorder
