The Canadian dollar edged higher against its U.S. counterpart on Tuesday, clawing back its losses from earlier in the session as oil prices rose and the recent move higher in U.S. Treasury yields stalled.
At 3:13 p.m., the Canadian dollar was trading 0.1 per cent higher at 1.2943 to the greenback, or 77.26 U.S. cents.
The currency, which on Monday touched its weakest intraday in more than one week at 1.3010 to the dollar, traded in a range of 1.2936 to 1.3004.
The loonie’s recovery from its low for the day came as the U.S. dollar pulled back from an earlier seven-week peak against a basket of currencies.
“The U.S. dollar was bid and gave up some of its gains as the day progressed,” said Win Thin, global head of emerging markets strategy at Brown Brothers Harriman. “Part of it is disappointment that U.S. yields didn’t go any higher.”
U.S. long-dated Treasury yields fell from multi-year highs in choppy trading as investors took a breather from selling bonds.
Higher interest rates and the U.S.-China trade war are among factors that are diminishing prospects for economic expansion, said the International Monetary Fund as it cut its forecast for global growth in 2018 and 2019.
Canada’s economy could suffer if global growth slows, since it exports many commodities, including oil.
U.S. crude oil futures settled 0.9 percent higher at $74.96 a barrel on growing evidence of falling Iranian crude exports before the imposition of new U.S. sanctions.
The loonie declined 0.3 per cent last week despite a deal to revamp the North American Free Trade Agreement and data on Friday showing a jump in domestic jobs.
Canadian housing starts fell in September to a seasonally adjusted annualized rate of 188,683 units, the third straight month of decline, data on Tuesday from the Canadian Mortgage and Housing Corp showed. Economists had expected starts to rise to 210,000.
Canadian government bond prices were higher across a flatter yield curve as the domestic debt market reopened following the Thanksgiving Day holiday on Monday. The 10-year climbed 23 cents to yield 2.574 per cent.
On Friday, the 10-year yield touched its highest intraday level since January 2014 at 2.615 per cent.