The Canadian dollar fell to a four-week low against its U.S. counterpart on Tuesday before paring its decline, as Bank of Canada Governor Stephen Poloz said the outlook for the domestic economy is good despite the overhang of high household debt.
At 4 p.m. EDT, the Canadian dollar was trading 0.1 per cent lower at $1.2860 to the greenback, or 77.76 U.S. cents.
The currency touched its weakest level since April 3 at $1.2914 as the U.S. dollar climbed to a nearly four-month high against a basket of major currencies.
Poloz said there is good reason to believe the central bank can manage the risks of Canada’s high household debt, even as he signalled that interest rate hikes will continue, increasing the cost of that debt.
Canada’s economy grew 0.4 per cent in February, Statistics Canada said, a sign that first-quarter growth could be stronger than the Bank of Canada is predicting.
“The CAD is outperforming on the crosses and that is a reflection of somewhat better data and oil prices ticking up again,” said Shaun Osborne, chief currency strategist at Scotiabank.
The loonie touched its strongest against the euro since Feb. 9 at $1.5396.
U.S. crude oil futures settled 1.9 per cent lower at $67.25 a barrel. Still, oil has climbed about 16 per cent since February.
Canada will push for a permanent exemption from U.S. steel and aluminum tariffs but the U.S. administration’s decision to postpone them is a “step forward,” Canadian Foreign Minister Chrystia Freeland said.
Canadian government bond prices were lower across the yield curve, with the two-year down 8 cents to yield 1.935 per cent and the 10-year falling 34 cents to yield 2.347 per cent.