The Canadian dollar was little changed against its U.S. counterpart on Thursday as higher oil prices and the strength of recent domestic data helped support the currency even as the greenback broadly climbed.
At 4 p.m. (2100 GMT), the Canadian dollar was trading 0.1 percent lower at $1.3017 to the greenback, or 76.82 U.S. cents. The currency traded in a narrow range of $1.2996 to $1.3039.
On Wednesday, the loonie touched its strongest level in nearly seven weeks at $1.2975. It was boosted by signs of progress in talks to update the North American Free Trade Agreement and recent domestic data that has added to bets for another interest rate hike this year from the Bank of Canada.
“The domestic fundamentals look really good right now and the market is looking at the CAD as more of a lower beta play in a risk-off environment,” said Bipan Rai, executive director and North America head, FX strategy at CIBC Capital Markets.
Low beta assets tend to be less volatile than the overall market.
The U.S. dollar rose to the highest in nearly two weeks against a basket of currencies, as a flare-up in trade tensions between the United States and China drove traders to buy the U.S. currency.
The price of oil, one of Canada’s major exports, rose after traders saw an industry report suggesting domestic crude stockpiles would soon decline. U.S. crude oil futures settled 1.9 percent higher at $68.96 a barrel.
Canadian government bond prices were mixed across the yield curve, with the two-year down 0.5 Canadian cent to yield 2.091 percent and the 10-year rising 4 Canadian cents to yield 2.365 percent.
The gap between the two-year yield and its U.S. counterpart narrowed by 2.1 basis points to a spread of 57.4 basis points in favor of the U.S. bond, its narrowest since June 8.
Canada’s trade data for June is due on Friday.