The Canadian dollar was little changed against its U.S. counterpart on Wednesday, clawing back its earlier decline as the potential for a last-minute Brexit deal weighed on the greenback.
The U.S. dollar fell across the board as dismal U.S. retail sales data painted a gloomy picture of the economy and as sterling and the euro benefited from hopes that Britain and the European Union were on the verge of an amicable divorce deal.
“It seems like we are getting closer and closer to a deal between the EU and the U.K.,” said Bipan Rai, North America head, FX strategy, at CIBC Capital Markets. “You are seeing some of that positioning off-loaded across the board and that has put the (U.S.) dollar on the defensive, and several currencies have gained as a result.”
Canada is a major exporter of commodities, including oil, so its economy could benefit from reduced global trade uncertainty.
Oil prices were supported by signs that OPEC and allied producers will continue to curb supplies in December. U.S. crude oil futures settled 1 per cent higher at $53.36 a barrel.
At 5 p.m., the Canadian dollar was trading nearly unchanged at 1.3197 to the greenback, or 75.77 U.S. cents.
The currency, which notched a one-month high on Friday at 1.3171 after data showing a second straight month of blockbuster Canadian job gains, traded in a range of 1.3184 to 1.3243.
Canada’s annual inflation rate held steady at 1.9 per cent in September, falling short of the 2.1 per cent rate that analysts had expected, data on Wednesday from Statistics Canada showed.
Still, the average of the Bank of Canada’s three core measures edged up to 2.1 per cent from 2.0 per cent, cementing expectations for the central bank to leave its benchmark interest rate on hold at 1.75 per cent later this month.
Canadian government bond prices were higher across a steeper yield curve, with the two-year up 4 cents to yield 1.668 per cent and the 10-year rising 14 cents to yield 1.548 per cent.
On Tuesday, the 10-year yield touched its highest level intraday in nearly one month at 1.577 per cent.
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