Canadian dollar retreats from 11-day high as U.S. stock market rally pauses
The Canadian dollar edged lower against its U.S. counterpart on Tuesday, pulling back from an 11-day high the previous day as the greenback broadly rose and this week’s rally in stocks lost some momentum.
U.S. stocks opened flat, pausing after a three-day surge as investors looked for more signs of strength in the economy in the wake of growth worries.
Upbeat U.S. manufacturing data on Monday helped boost the U.S. dollar. On Tuesday, it climbed to a nearly four-week high against a basket of major currencies.
At 9:39 a.m. (1339 GMT), the Canadian dollar was trading 0.2 per cent lower at 1.3332 to the greenback, or 75.01 U.S. cents. The currency, which touched on Monday its strongest level in nearly two weeks at 1.3297, traded in a range of 1.3303 to 1.3337.
The loonie has climbed 2.3 per cent since the start of the year, tying sterling as the best performing G10 currency.
Furthermore, the Canadian dollar has had a winning steak in April. In 11 of the last 13 years it has gained ground in the month, a sequence strategists link to seasonal vitality in stocks and energy products.
The price of oil, one of Canada’s major exports, rose to its highest this year on the prospect that more sanctions against Iran and further disruptions to Venezuelan output could deepen an OPEC-led supply cut, and as the market became less worried that demand may slow.
U.S. crude was up 1.1 per cent at $62.24 a barrel.
On Monday, Bank of Canada Governor Stephen Poloz expressed guarded optimism that the country would emerge from a soft patch but maintained a cautious tone overall, saying the economic outlook still warrants an interest rate below the neutral range.
The central bank’s estimate of neutral, the level at which it is neither stimulating nor restraining the economy, is between 2.5 per cent and 3.5 per cent.
Canadian government bond prices were higher across the yield curve, with the two-year up 4 Canadian cents to yield 1.584 per cent and the 10-year rising 24 Canadian cents to yield 1.675 per cent.
Canada’s jobs data for March is due on Friday.