TORONTO (Reuters) - Canada’s dollar eked marginal gains against the U.S. currency on Thursday following North American economic data, which included rising exports in Canada and the United States.
Canada’s trade deficit fell unexpectedly in September as exports increased and imports were unchanged, Statistics Canada data indicated.
Trade is a major driver of Canada’s economy and analysts cite the problems faced by exporters, such as a strong Canadian dollar and weak foreign markets, as reasons for sluggish growth in recent months.
At 10:06 a.m. (1506 GMT), the Canadian dollar traded at C$0.9956 to the U.S. dollar, or $1.0044, slightly firmer than Wednesday’s North American close of C$0.9961, or $1.0039.
“The currency doesn’t want to garner any kind of support from what ordinarily would be a positive report. The backdrop of commodities is kind of neutral. It’s just one of those days where there’s not a lot of sense of direction right now,” said Michael Gregory, senior economist at BMO Capital Markets.
The Canadian dollar was outperforming all of its major currency counterparts, including the euro, which touched a two-month low against the U.S. dollar after the European Central Bank kept interest rates at a record low and said the region’s economy showed little signs of recovering before the end of the year.
Also less positive for the Canadian economy was a report that showed Canadian housing starts fell in October as both single and multiple urban starts slumped. The Canada Mortgage and Housing Corp’s report confirmed the country’s once-booming housing market was slowing further.
South of the border, the U.S. trade deficit narrowed last month as well on increasing exports, suggesting global demand for U.S. goods was holding up despite the debt crisis in Europe.
A separate report showed the number of Americans filing new claims for unemployment benefits fell last week, suggesting the labor market’s slow recovery was gaining traction although Superstorm Sandy distorted the data.
The currency was expected to trade around C$0.9900 and C$ 1.0000, Rahim Madhavji, president at Knightsbridge Foreign Exchange wrote in a note to clients, adding that the currency was seeking direction from equities and commodities.
The price of Canadian government debt mostly fell across the curve. The two-year government of Canada bond fell 3 Canadian cents to yield 1.093 percent, while the benchmark 10-year bond shed 8 Canadian cents to yield 1.753 percent.
Reporting by Solarina Ho; Editing by Chizu Nomiyama