The Canadian dollar strengthened against its U.S. counterpart on Thursday, recovering from a two-week low the day before, as the greenback broadly declined and investors turned their attention to domestic retail sales data on Friday.
The U.S. dollar weakened against a basket of major currencies after a slew of central bank decisions came in more hawkish than expected.
“It does seem to be more of a dollar move than anything else, but essentially we are still rangebound here,” said Shaun Osborne, chief currency strategist at Scotiabank. “We might get a bit more direction off of the retail sales number tomorrow.”
Canada’s retail sales report for July is due on Friday, which could help guide expectations for the Bank of Canada’s interest rate outlook.
Canada’s central bank has left its policy rate on hold this year even as some of its global peers, including the U.S. Federal Reserve, have eased.
On Thursday, data for August showed that Canada’s labor force was boosted by 49,300 jobs and that Canadian home prices rose for the fourth consecutive month.
At 3:28 p.m., the Canadian dollar was trading 0.3 per cent higher at 1.3253 to the greenback, or 75.45 U.S. cents. The currency, which on Wednesday hit its weakest intraday level since Sept. 4 at 1.3310, traded in a range of 1.3242 to 1.3308.
There have been signs in the market of a significant order being worked to sell the Canadian dollar but the selling pressure tends to ease when the currency gets to 1.33, Osborne said.
U.S. crude oil futures settled 2 cents higher at $58.13 a barrel as the market assessed supply risks following last weekend’s attacks on Saudi oil infrastructure. Oil is one of Canada’s major exports.
Canadian government bond prices were slightly higher across a flatter yield curve, with the two-year up 1 cent to yield 1.598 per cent and the 10-year rising 8 cents to yield 1.429 per cent.
The 10-year yield touched its lowest intraday level since Sept. 12 at 1.402 per cent.
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