TORONTO (Reuters) - The Canadian dollar firmed against the U.S. dollar on Wednesday as commodity and most equity markets rallied but it stayed within its recent tight range.
Oil prices rose, led by a gain of 2.5 percent in U.S. crude on a surprisingly big drop in U.S. weekly gasoline stockpiles. Gold prices also climbed following a recent sell-off that sent the precious metal to a two-year low. <O/R><GOL/>
The moves helped lift the Toronto Stock Exchange’s resource-rich benchmark index nearly 1.5 percent. Most global equity markets also rose following healthy corporate earnings and speculation that the European Central Bank will cut interest rates following weak economic data out of Germany. <MKTS/GLOB>
“Definitely a lag effect with what was going on with the commodity market and the equity market and I think that was what led to the push,” said David Bradley, director of foreign exchange trading at Scotiabank, noting the currency did not react initially to the rally.
“I think the market’s positioned long-(U.S.)dollar.”
The Canadian dollar, which was weaker against most other major currencies, finished the North American session at C$1.0256 against its U.S. counterpart, or 97.50 U.S. cents, slightly stronger than Tuesday’s close at C$1.0262, or 97.45 U.S. cents.
Canada’s dollar did not budge after U.S. data showed orders for long-lasting U.S. manufactured goods recorded their biggest drop in seven months in March, while a gauge of planned business spending rose only modestly, signs of a slowdown in economic activity.
The Bank of Canada is expected to announce a replacement any day for Governor Mark Carney, who is leaving in June to head the Bank of England. The bank’s current deputy, Tiff Macklem, is widely expected to take the helm, but analysts say there is always a chance of a surprise.
The loonie, as the currency is colloquially known, has finished within a tight 12-point range since the central bank stuck to its oft-repeated view last week that its next interest rate move will be a rise.
Canadian government bond prices were generally higher across the curve, with the two-year bond up less than half a Canadian cent to yield of 0.945 percent and the benchmark 10-year bond climbing 10 Canadian cents to yield 1.717 percent.
Editing by Peter Galloway