November 21, 2017 / 2:48 PM / in 24 days

Canadian dollar recovers from near three-week low as oil rises

TORONTO (Reuters) - The Canadian dollar firmed against its U.S. counterpart on Tuesday, with the currency recovering from an earlier three-week low as oil prices edged higher, while data showed a surprise drop in domestic wholesale trade.

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

Prices of oil, one of Canada’s major exports, rose as traders looked ahead to a meeting next week at which major crude exporters are expected to extend production cuts.

U.S. crude CLc1 prices were up 0.12 percent to $56.49 a barrel.

Canadian wholesale trade fell by 1.2 percent in September from August, Statistics Canada said. Analysts had forecast a 0.3 percent increase.

At 9:24 a.m. ET (1424 GMT), the Canadian dollar CAD=D4 was trading at C$1.2794 to the greenback, or 78.16 U.S. cents, up 0.2 percent.

The currency’s strongest level of the session was C$1.2790, while it touched its weakest since Nov. 2 at C$1.2837 as investors weighed an uncertain outlook for NAFTA that could stall further interest rate hikes from the Bank of Canada.

Negotiators from the United States, Mexico and Canada square off on Tuesday for the last time in a fifth round of talks to rework the North American Free Trade Agreement, with stalemate looming on a proposal to ramp up regional content for autos.

Investors were also awaiting a speech by Federal Reserve Chair Janet Yellen later on Tuesday. Minutes from the Fed’s November meeting will be released on Wednesday.

It is a holiday-shortened week for U.S. markets.

Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 2 Canadian cents to yield 1.462 percent and the 10-year CA10YT=RR rising 17 Canadian cents to yield 1.934 percent.

Canadian retail sales data for September is due on Thursday.

Reporting by Fergal Smith; Editing by Meredith Mazzilli

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