The Canadian dollar edged higher against a broadly stronger U.S. counterpart on Thursday, but kept within its recent trading range ahead of domestic GDP data that could guide expectations for next week’s interest rate decision by the Bank of Canada.
At 3:24 p.m. (1924 GMT), the Canadian dollar was trading 0.1% higher at 1.3299 to the greenback, or 75.19 U.S. cents. The currency has traded over the last two weeks in a range of 1.3225 to 1.3346.
“We are mid-range here and just waiting for a bit more direction either from the data tomorrow or from the Bank of Canada next week,” said Shaun Osborne, chief currency strategist at Scotiabank.
Gross domestic product data, due on Friday, is expected to confirm that Canada’s economy has rebounded after a slowdown around the turn of the year. Analysts project second-quarter growth of 3%.
“I still rather think that the Canadian dollar looks undervalued at these kind of levels and we should see good support emerge for the Canadian dollar on minor declines,” Osborne said.
The U.S. dollar climbed against a basket of major currencies as news that Washington and Beijing were discussing renewing their negotiations in September eased anxieties about the ongoing trade war.
Canada is a major exporter of commodities, including oil, so its economy could benefit from an improved outlook for global trade.
The price of oil was supported on Thursday by a deep draw on U.S. crude inventories. U.S. crude oil futures settled 1.7% higher at $56.71 a barrel.
Meanwhile, data from Statistics Canada showed that Canada’s current account deficit narrowed more than expected to $6.4 billion in the second quarter from a revised $16.6 billion in the first quarter, on a lower deficit on goods.
Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries as global stocks rallied.
The two-year fell 3 Canadian cents to yield 1.346% and the 10-year was down 26 Canadian cents to yield 1.149%. Earlier this month, the 10-year yield hit its lowest level since October 2016 at 1.083%.
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