TORONTO (Reuters) - The Canadian dollar edged higher against the greenback on Tuesday, sticking to a narrow trading range as investors awaited guidance on the Bank of Canada interest rate outlook and weighed prospects of the United States delaying additional tariffs on China.
Bank of Canada Governor Stephen Poloz, who will step down when his seven-year mandate expires in June, is due to speak on Thursday on “seeing the big picture.”
Poloz’s speech “will underscore the fact that they are on hold, certainly for now,” said Shaun Osborne, chief currency strategist at Scotiabank. “The hurdle for a rate cut here is quite high.”
Last week, the central bank left its benchmark interest rate unchanged at 1.75% as it pointed to early signs the global economy was stabilizing and sources of resilience in the Canadian economy.
Chances of a cut at the bank’s next rate decision in January have declined to less than 15% from about 25% earlier this month. BOCWATCH
Wall Street’s main stock indexes were little changed, hovering near record highs, as investors awaited concrete news on whether U.S. tariffs on Chinese imports would take effect on Sunday, a potential turning point in the two countries’ trade dispute that has convulsed markets.
Canada is a major exporter of commodities, including oil, so its economy could benefit from reduced trade uncertainty. U.S. crude oil futures CLc1 settled 0.4% higher at $59.24 a barrel.
At 3:29 p.m. (2029 GMT), the Canadian dollar CAD=D4 was trading 0.1% higher at 1.3226 to the greenback, or 75.61 U.S. cents.
The currency traded between 1.3225 to 1.3249, holding in a narrow range despite news that top officials from Canada, Mexico and the United States signed a fresh overhaul of their quarter-century-old regional trade pact.
Most investors and the Bank of Canada have probably already taken the U.S.-Mexico Canada Agreement (USMCA) into account, Osborne said.
Canadian government bond prices were lower across a steeper yield curve, with the two-year CA2YT=RR down 0.5 Canadian cent to yield 1.669% and the 10-year CA10YT=RR falling 15 Canadian cents to yield 1.601%.
Reporting by Fergal Smith; Editing by Steve Orlofsky and Peter Cooney