By Jennifer Kwan
TORONTO, June 10 (Reuters) - The Canadian dollar edged higher against the U.S. dollar on Wednesday morning on strength in commodities and global stocks, erasing earlier losses on domestic data that showed the country posted a trade deficit in April.
Statistics Canada said on Wednesday Canada posted a trade deficit of C$179 million in April, as a 3.2 percent reduction in prices helped cut the value of exports to an almost 10-year low.
Analysts had on average predicted Canada would run a surplus of C$1.0 billion after a C$1.0 billion surplus in March. [ID:nN10431263]
"The important data release was the trade data that came in weaker than expected, pushing the surplus back into a very small deficit, and the Canadian dollar did react to that," said Matthew Strauss, senior currency strategist, RBC Capital Markets.
"With exports still under pressure that could mean the recovery in Canada would likely be slower than what some people would have hoped for. That reflects negatively on the economy."
After the data, the Canadian currency fell as low as C$1.1068 to the U.S. dollar, or 90.35 U.S. cents.
At 9:12 a.m. (1312 GMT), the currency was at C$1.1022 to the U.S. dollar, or 90.73 U.S. cents, up slightly from Tuesday's finish at C$1.1032 to the U.S. dollar, or 90.65 U.S. cents.
Also on Wednesday, data showed the prices of new homes in Canada in April fell by 0.6 percent from March and by 3.0 percent from April 2008, the largest year-on-year decline for more than 17 years. [ID:nN10299734]
Even though the currency slipped following the data, Strauss said he expected the losses to be limited or erased by strength in the price of oil CLc1, a key Canadian export, which shot up above $71 a barrel for the first time in seven months on signs demand for crude could be recovering. [ID:nSP430902]
Other factors supporting the unit were weakness in the U.S. dollar and strength in global equities, which rose on economic recovery hopes. [MKTS/GLOB]
"The dominant theme in FX markets remain the global outlook and how equities are reacting to that. That is, whether we're seeing an increased risk appetite or not, " Strauss said.
Canadian bond prices were lower across the curve, following the U.S. Treasuries market, where long-dated bonds fell as strength in stocks dented the appeal of safer-haven government debt. [ID:nN10307278] (Editing by Padraic Cassidy)