After hitting a one-week low, the Canadian dollar pared its losses as investors weighed minutes from the last Federal Reserve meeting and prospects for progress on NAFTA trade talks.
At 4 p.m. EDT, the Canadian dollar was trading 0.1 per cent lower at $1.2832 to the greenback, or 77.93 U.S. cents. The currency had hit its weakest intraday level since May 15 at $1.2916.
“There have been some comments on NAFTA, on the auto sector, which suggest that things continue to move along there,” said Shaun Osborne, chief currency strategist at Scotiabank.
President Donald Trump, who has repeatedly pledged to revive American manufacturing, said that “big news” was coming that would be welcomed by U.S. auto workers, and he suggested it was somehow linked to North American Free Trade Agreement talks.
Canada sends 75 per cent of its exports to the United States so its economy could benefit if a deal is reached.
The U.S. dollar climbed against a basket of major currencies, but the rally stalled after the Fed suggested higher inflation may not result in faster interest rate hikes.
“The Fed minutes were viewed somewhat dovishly,” Osborne said. “We have seen U.S. yields pull back a bit.”
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 6.5 cents to yield 2.023 per cent and the 10-year climbed 67 cents to yield 2.439 per cent.
U.S. crude oil futures settled 0.5 per cent lower at $71.84 a barrel, pressured by an unexpected build in U.S. crude and gasoline inventories despite strong demand.
Oil is one of Canada’s major exports.
Lending to small Canadian businesses picked up in March as gains were seen in the manufacturing and construction industries, boding well for stronger economic growth in the coming months.