The Canadian dollar edged lower against its U.S. counterpart on Thursday, but held near a seven-week high as investors valued its potential to benefit from an improved outlook for the global economy.
Wall Street hit all-time highs again as U.S. Treasury Secretary Steven Mnuchin said an initial trade deal between the United States and China would be signed in early January, adding to optimism that was fueled by a breakthrough in trade talks last week.
Canada is a major exporter of commodities, including oil, so its economy could benefit from an improved outlook for global growth.
“In a world where global growth is improving Canada looks awfully attractive,” said Adam Button, chief currency analyst at ForexLive.
Stable government and relatively high interest rates add to the attractiveness of the Canadian dollar, Button said.
The Bank of Canada has left its benchmark interest rate on hold this year at 1.75 per cent despite easing by some global peers, such as the Federal Reserve and the European Central Bank.
At 2:29 p.m. EST, the Canadian dollar was trading 0.1 per cent lower at 1.3124 to the greenback, or 76.20 U.S. cents. The currency, which notched on Wednesday a seven-week high at 1.3103, traded in a range of 1.3108 to 1.3138.
U.S. crude oil futures settled 0.5 per cent higher at $61.22 a barrel, buoyed by falling U.S. crude inventories and thawing U.S.-China trade relations.
Canadian wholesale trade declined by 1.1 per cent in October from September on weaker sales in the machinery, equipment and supplies subsector, as well as agricultural supplies, Statistics Canada said. Analysts had forecast a 0.1 per cent decrease.
Separate data from payroll services provider ADP showed that Canada added 30,900 jobs in November, the fifth straight month of gains.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 5 cents to yield 1.700 per cent and the 10-year was up 31 cents to yield 1.657 per cent.
Earlier in the session, the 10-year yield touched its highest level since May 22 at 1.736 per cent.
Canada’s retail sales report for October is due on Friday.
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