The Canadian dollar CADUSD edged higher against its U.S. counterpart on Tuesday as investors weighed uncertainty caused by Russia’s invasion of Ukraine and domestic data showed the economy expanding at a robust pace in the fourth quarter.
The Canadian economy grew 6.7 per cent in the fourth quarter on an annualized basis, beating analyst expectations and the Bank of Canada’s own forecast of 5.8 per cent, data from Statistics Canada showed.
A preliminary estimate pointed to growth continuing in January, while separate data showed Canadian manufacturing activity expanding in February at the fastest pace in three months.
Canada’s central bank is expected to hike interest rates on Wednesday for the first time since October 2018 despite the war in Ukraine.
High-level talks between Kyiv and Moscow ended with no agreement and a huge Russian armored column bore down on Kyiv, pressuring equity markets globally and pushing oil, one of Canada’s major exports, above $100 a barrel.
Safe havens benefited, with the U.S. dollar climbing against a basket of major currencies. Meanwhile, euro zone bond yields tumbled as traders reduced bets on rate hikes this year from the European Central Bank.
The Canadian dollar was up 0.1 per cent at 1.2665 to the greenback, or 78.96 U.S. cents, after trading in a range of 1.2654 to 1.2693.
Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries. The 10-year rate touched its lowest since Feb. 3 at 1.765 per cent before bouncing slightly to 1.791 per cent, down 5.8 basis points on the day.
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