The Canadian dollar was little changed against its U.S. counterpart on Tuesday, extending its sideways pattern since last week as investors looked to corporate earnings and the contents of a U.S.-China trade deal to provide fresh impetus.
At 2:29 p.m., the Canadian dollar was trading nearly unchanged at 1.3052 to the greenback, or 76.62 U.S. cents. The currency, which last Thursday hit a near two-week low at 1.3104, traded in a range of 1.3047 to 1.3080.
“There is not a lot of CAD specific information out there,” said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. “I think the loonie over the coming weeks is going to be very much at the mercy of global sentiment.”
Catalysts that could move the loonie include the U.S. corporate earnings season and the Phase 1 trade deal between the United States and China, should its contents surprise investors, Schruder said.
China has pledged to buy almost $80 billion of additional manufactured goods from the United States over the next two years as part of a trade deal to be signed on Wednesday in Washington, according to a Reuters source.
Canada runs a current account deficit and is a major exporter of crude oil, so its economy could benefit from a pick-up in the global flow of trade or capital.
Oil prices rose after declining for five days on easing Middle East tensions. U.S. crude oil futures were up 0.3 per cent at $58.24 a barrel.
On Monday, a quarterly business survey from the Bank of Canada showed sentiment was “broadly positive,” cementing expectations for it to leave its benchmark interest rate on hold next week at 1.75 per cent.
“The Canadian central bank view I think is well understood by both domestic and international players, in that the Bank of Canada is firmly in the wait and see camp,” said Schruder.
The central bank has stayed on the sidelines since October 2018 even as some other major central banks have eased. Its stance has helped support the loonie, which was the top-performing G10 currency in 2019 with a gain of 5 per cent.
Canadian government bond prices were higher across a flatter yield curve on Tuesday in sympathy with U.S. Treasuries as U.S. data showed consumer prices rose moderately in December.
The 10-year was up 16 cents to yield 1.593 per cent.
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