Canadian dollar steadies as imports decline boosts trade surplus
- Loonie trades in a range of 1.2581 to 1.2629
- Canada posts a trade surplus of C$1.9 billion in August
- Price of US oil increases 1.4%
- Canadian bond yields rise across a steeper curve
TORONTO: The Canadian dollar hardly moved against its broadly stronger US counterpart on Tuesday as oil prices rose and data showed Canada's trade surplus widening in August.
Canada posted a trade surplus of C$1.9 billion in August, beating expectations, as exports rose by 0.8% and imports fell 1.4%, Statistics Canada said.
"The fact that the wider-than-expected surplus was largely the result of more weakness in goods imports than anticipated will likely blunt any impacts from the data on the Canadian dollar," said Royce Mendes, a senior economist at CIBC Capital Markets.
One of Canada's major exports is oil, which was supported by the OPEC+ decision on Monday to stick to planned output rises rather than pumping even more. US crude prices were up 1.4% at $78.74 a barrel, while the US dollar edged back towards a one-year high versus major rivals ahead of a key payrolls report on Friday.
Canada's employment report is also due on Friday, which could offer clues on the Bank of Canada policy outlook. Analysts expect the central bank to further cut its bond purchase program later this month.
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The Canadian dollar was last at 1.2589 to the greenback, or 79.43 US cents, after trading in a range of 1.2581 to 1.2629. On Monday, the currency notched its strongest level in nearly four weeks at 1.2553.
Canadian government bond yields were higher across a steeper curve, tracking the move in US Treasuries. The 10-year rose 2.1 basis points to 1.503%, trading near its highest level since June.
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