The Canadian dollar edged higher against its U.S. counterpart on Wednesday as oil prices rose and Wall Street’s main indexes hit a one-month high, but investor interest in the currency was dulled by global issues including British political uncertainty.
British Prime Minister Theresa May saw off a no-confidence vote, a day after lawmakers defeated her Brexit divorce deal, while recent trade data from China has raised investor worries of a global economic slowdown.
“The Canuck buck remains confined to the children’s table of global currencies,” said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. “The market is focused on bigger picture global issues.”
Stocks were boosted by upbeat earnings from the banking sector, and the price of oil, one of Canada’s major exports, added to Tuesday’s sharp rally. U.S. crude oil futures settled up 0.4 per cent at $52.31 a barrel.
At 3:33 p.m. (2033 GMT), the Canadian dollar was trading 0.1 per cent higher at 1.3248 to the greenback, or 75.48 U.S. cents. The currency, which has climbed 2.9 per cent since the start of 2019, traded in a range of 1.3236 to 1.3293.
“The loonie has gained slightly over the last two sessions but the moves are muted,” Schruder said. “There is no significant interest by large corporate firms to get involved here.”
Narrow ranges for the loonie come ahead of the release on Friday of Canada’s inflation report for December, which could help guide expectations for future interest rate hikes from the Bank of Canada.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 5.5 Canadian cents to yield 1.923 per cent and the 10-year
declined 25 Canadian cents to yield 2.000 per cent.
The 10-year yield touched its highest intraday since Dec. 24 last year at 2.002 per cent.
Canada is planning to issue a global bond denominated in U.S. dollars later this week, subject to market conditions, the country’s Department of Finance said.