The Canadian dollar edged higher against the greenback, after domestic wholesale trade data indicated that the Bank of Canada would leave interest rates unchanged this year
The Canadian dollar edged higher against the greenback on Monday, clawing back its earlier decline, after domestic wholesale trade data supported bets that the Bank of Canada would leave interest rates unchanged this year.
The Bank of Canada has kept its benchmark interest rate on hold at 1.75% in 2019 even as some of its major peers, including the U.S. Federal Reserve, have eased.
Reduced expectations for another Fed rate cut as soon as October and firm domestic data are giving the Bank of Canada more time to remain on the sidelines, said Tony Valente, senior FX dealer at AscendantFX.
Valente said that this is why he doesn’t see the Canadian dollar losing any ground right now.
Canadian wholesale trade increased by 1.7% in July from June on stronger sales in the personal and household goods subsector, as well as motor vehicles and parts, Statistics Canada said. Analysts had forecast a 0.1% decrease.
Canada’s economy could also get a boost if politicians were to carry out spending or tax-cut measures promised in the federal election campaign.
At 3:50 p.m. (1950 GMT), the Canadian dollar was trading 0.1% higher at 1.3254 to the greenback, or 75.45 U.S. cents. The currency, which rose 0.2% last week, traded in a range of 1.3252 to 1.3305.
The 200-day moving average, which is at 1.3306, has been providing support for the loonie, Valente said.
The U.S. dollar rose against a basket of major currencies after weaker-than-expected German flash purchasing managers’ index survey data pressured the euro.
For the price of oil, one of Canada’s major exports, signs of European economic weakness were offset by lingering concerns over global supplies following the Sept. 14 attack on Saudi oil facilities. U.S. crude oil futures settled nearly 1% higher at $58.64 a barrel.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 3 Canadian cents to yield 1.557% and the 10-year was up 17 Canadian cents to yield 1.368%.
The 10-year yield touched its lowest intraday level since Sept. 10 at 1.339%.