The Canadian dollar edged higher against its U.S. counterpart on Monday as hopes rose of a deal to end the war in the Middle East and ahead of a speech by a Bank of Canada policymaker that could offer clues on the interest rate outlook.
The loonie was trading 0.1 per cent higher at 1.3800 per U.S. dollar, or 72.46 U.S. cents, after moving in a range of 1.3796 to 1.3823. On Friday, the currency touched a near six-week low at 1.3824.
“The near-term focus for the CAD remains centered on the outlook for relative central bank policy, given the material widening in interest rate differentials that has reflected a softer repricing of the BoC’s path along with a firming in the outlook for the Fed (U.S. Federal Reserve),” Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.
Nicolas Vincent, External Deputy Governor of the Bank of Canada, is due to speak on Tuesday on the labour market and structural change in the Canadian economy.
Canada’s 2-year yield was trading about 128 basis points below its U.S. equivalent, with the gap widening from 102 basis points mid-month.
Iran’s top negotiator and its foreign minister were in Doha for talks with Qatar’s prime minister on a potential deal with the U.S. to end the three-month-old war, an official briefed on the visit said.
Equity markets globally rallied, the U.S. dollar fell against a basket of major currencies and the price of oil , one of Canada’s major exports, was down 6.5 per cent at $90.36 a barrel.
Domestic data had little impact – a preliminary reading showed that wholesale trade rose 0.1 per cent in April from March. Canadian bond yields moved lower across the curve.
The 10-year was down 6.8 basis points at 3.465 per cent.
