Canadian dollar firms to seven-week high after Canada trade deficit shrinks
By Solarina Ho
TORONTO (Reuters) - Canada's currency was steady on Tuesday after briefly touching its strongest level in nearly two months against the U.S. dollar following data that showed Canada's trade deficit unexpectedly shrank in October.
Canada posted a trade deficit of C$169 million ($171 million) in October from a revised C$1.01 billion deficit in September as imports fell 1.2 percent while higher prices and volumes drove up exports by 1.0 percent. Analysts had expected a shortfall of C$1.2 billion.
"It's indicating a possible bounce back in growth, that's probably supporting the Canadian dollar," said Paul Ferley, assistant chief economist at Royal Bank of Canada.
"It's better than expected so (the Canadian dollar) will provide a little bit of lift, but I think the impact could be fairly short-lived until we get further confirmation of indications of growth bouncing back here in Canada for the final quarter of this year."
The data was in contrast to U.S. trade data, which showed its deficit widened in October. Exports suffered their biggest drop in nearly four years, indicating slowing global demand was spilling over into the already struggling U.S. economy.
At 9:54 a.m. (1454 GMT), the Canadian dollar stood at C$0.9868 versus its U.S. counterpart, or $1.0134, little changed from Monday's session close at C$0.9870, or $1.0132.
The currency touched a session high after the Canadian trade data release. It hit C$0.9858, or $1.0144, its strongest level since October 19, but was still stuck in a narrow range of between $0.9858 to $0.9880.
It underperformed against other major currencies against a broadly weaker greenback, including the euro after better-than-expected German investor sentiment data. Continued...