The Canadian dollar fell against
its broadly stronger U.S. counterpart on Tuesday, but stayed
within its recent trading range as data showed a surprise
Canadian trade surplus and investors awaited a Bank of Canada
interest rate decision.
The Canadian dollar was trading 0.3% lower at 1.2115
to the greenback, or 82.54 U.S. cents, having pulled back from a
six-year high last week at 1.2007. It’s weakest level since
mid-May was 1.2144.
“The CAD is generally trading in tandem with its G10 peers
today, in what appears to be an environment of modest,
broad-based USD strength,” said Eric Theoret, global macro
strategist at Manulife Investment Management.
“The currency has been range bound for over a month now,
trading within a remarkably narrow range following its solid run
into the start of May,” Theoret added.
The loonie has been supported in recent months by higher
commodity prices and a more hawkish stance from the Bank of
Canada.
The central bank is widely expected to leave its key
interest rate on hold at 0.25% on Wednesday and through the rest
of 2021. But it could cut the pace of its bond purchases once
gain as soon as next quarter, a Reuters poll showed.
Canada posted a trade surplus of C$594 million in April, as
imports fell at a much faster rate than exports, Statistics
Canada said. Analysts had predicted a deficit of C$700 million.
The U.S. dollar rose against a basket of major
currencies, while the price of oil , one of Canada’s major
exports, settled 1.2% higher at $70.05 a barrel.
Canadian government bond yields were lower across a flatter
curve, tracking the move in U.S. Treasuries. The 10-year
fell to its lowest level since April 15 at 1.439%
before recovering to 1.449%, down 2.9 basis points on the day.
– Reuters