Canadian dollar pushes higher after upbeat data
By Frank Pingue
TORONTO (Reuters) - The Canadian dollar finished higher against the U.S. dollar on Tuesday, snapping a seven-session losing skid as data showed Canada's trade surplus widened in June thanks to the commodity price boom.
Domestic bond prices finished higher across the curve as concerns about the U.S. financial crisis shook North American equities and triggered demand for more secure investments like government debt.
The Canadian dollar closed at C$1.0628 to the U.S. dollar, or 94.09 U.S. cents, up from C$1.0693 to the U.S. dollar, or 93.52 U.S. cents, at Monday's close.
The bulk of the currency's gains came early in the session and right after data showed Canada's trade surplus rose in June, a positive for an economy that has been flirting with a recession in recent months.
Another reason for the Canadian dollar's gain was a weaker U.S. dollar as the greenback's recent rally finally gave way profit-taking. Also, long-term bond yields moved slightly in favor of the Canadian dollar.
The Canadian currency's sudden rally surprised some experts since the domestic data was merely in line with expectations and came alongside a report that showed the U.S. trade deficit unexpectedly shrank in June.
"The Canadian data were good as well but my sense is they pretty well just met expectations, so it was a bit surprising that the Canadian dollar actually strengthened against the U.S. dollar after the two trade reports," said Sal Guatieri, senior economist at BMO Capital Markets.
"Plus, the U.S. trade report was exceptionally strong and I thought that would have given the U.S. dollar a good kick because it implies a fairly hefty upward revision to second-quarter GDP growth." Continued...