TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from an earlier 10-day high even as oil rose and the greenback lost ground against a basket of major currencies.
The loonie touched its highest since Feb. 6 at C$1.3010, stalling just in front of the C$1.3000 threshold.
“It has been a level of support (for the greenback) we have seen for the last few weeks now,” said Eric Theoret, currency strategist at Scotiabank.
The U.S. dollar .DXY posted its steepest one-day drop in over two weeks, due to lower U.S. bond yields and uncertainty over the timing of the Federal Reserve’s next interest rate increase.
U.S. crude CLc1 prices settled 25 cents higher at $53.36 a barrel, helped by possible renewed efforts by major oil producers to reduce a price-sapping glut. [O/R]
Oil is one of Canada’s major exports.
The Canadian dollar CAD=D4 ended at C$1.3080 to the greenback, or 76.45 U.S. cents, slightly weaker than Wednesday’s close of C$1.3075, or 76.48 U.S. cents.
“We are right back to the closing levels for the past two days,” said Theoret.
Earlier gains for the loonie came one day after domestic data showed a jump in manufacturing sales volumes that boded well for fourth-quarter economic growth.
On Monday, U.S. President Donald Trump said he only wants to tweak trade ties with Canada, tempering investor concerns about the county’s trade outlook.
Canada sends 75 percent of its exports to the United States, but took a step on Wednesday toward reducing reliance on its southern neighbor with the passage of the Comprehensive Economic and Trade Agreement, a trade deal between Canada and the EU.
TransCanada Corp (TRP.TO), Canada’s No. 2 pipeline operator, filed an application with Nebraska authorities to route its Keystone XL pipeline through the state, after Trump cleared the way for the project last month.
If constructed, Keystone would provide oil producers in Canada with a quicker route to send crude to U.S. Gulf Coast refiners.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 3.5 Canadian cents to yield 0.799 percent and the 10-year CA10YT=RR climbed 33 Canadian cents to yield 1.744 percent.
On Wednesday, the 10-year yield touched a two-week high at 1.801 percent.
Reporting by Fergal Smith; Editing by Meredith Mazzilli and James Dalgleish