Loonie strengthens on vehicle parts sales, rise in oil prices
The Canadian dollar strengthened against its U.S. counterpart on Tuesday, approaching last week’s three-month high, as domestic data showed a much stronger-than-expected rise for wholesale trade in April.
Canadian wholesale trade increased by 1.7 per cent in April from March on stronger sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada told Reuters. Analysts had forecast a 0.2 per cent increase.
The stronger-than-expected gain could boost prospects for April gross domestic product data, which is due for release on Friday.
It also could support the view that the Bank of Canada will hold off from cutting interest rates in the coming months. Money markets see about a 50 per cent chance of a rate cut by December, which is much less easing than expected from the U.S. Federal Reserve.
Investors will closely monitor a speech later in the day by Fed Chair Jerome Powell.
At 8:58 a.m. EST (1258 GMT) Tuesday, the Canadian dollar was trading 0.1 per cent higher at 1.3159 to the greenback, or 75.99 U.S. cents. The currency, which on Thursday touched its strongest intraday level since March 1 at 1.3151, traded in a range of 1.3158 to 1.3196.
Gains for the loonie came as the price of oil, one of Canada’s major exports, was supported by risks to supply linked to tensions around Iran. U.S. crude oil futures rose 0.1 per cent to $57.97.
Canadian government bond prices were little changed across the yield curve, with the two-year down half-a-cent to yield 1.408 per cent and the 10-year falling one cent to yield 1.462 per cent.