Canadian dollar retreats from two-week high ahead of key domestic data

Canadian dollar retreats from two-week high ahead of key domestic data

The Canadian dollar weakened against its U.S. counterpart on Tuesday, with the loonie pulling back from a two-week high a day before domestic economic data that could offer clues on the Bank of Canada’s policy outlook.

The loonie was trading 0.3 per cent lower at 1.2560 to the greenback, or 79.62 U.S. cents, having traded in a range of 1.2516 to 1.2575. On Monday, the loonie notched its strongest intraday level since March 22 at 1.2497.

Canada’s trade report for February is due on Wednesday, while the March employment report is due on Friday.

Some strategists expect the Bank of Canada to reduce its bond purchases when it makes its next interest rate announcement on April 21. Such a move would put the Canadian central bank at odds with some peers, including the Federal Reserve and European Central Bank, which have said they will maintain or even increase the pace of bond-buying.

The U.S. dollar steadied against a basket of major currencies after a sell-off on Monday. The greenback was supported by short-term optimism about the outlook for the U.S. economy.

Strong economic data from China and the United States helped to lift the price of oil, one of Canada’s major exports, recouping some of the previous session’s losses, as coronavirus-led volatility continues to dominate. U.S. crude prices were up 1.9 per cent at $59.76 a barrel.

Canadian government bond yields were lower across a flatter curve in tandem with U.S. Treasuries. The 10-year fell 3.4 basis points to 1.521 per cent.

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Published at Tue, 06 Apr 2021 13:59:28 +0000