TORONTO (Reuters) - The Canadian dollar eased slightly against the U.S. dollar on Wednesday, as political uncertainty in Washington supported safe-haven currencies and domestic manufacturing sales rose in line with economists’ expectations.
At 4:00 p.m. ET (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.3616 to the greenback, or 73.44 U.S. cents, down 0.1 percent, according to Reuters data.
“It’s a conundrum today...because the U.S. dollar is obviously on the backfoot,” said Amo Sahota, director at Klarity FX in San Francisco, adding that other currency drivers including oil prices and interest rate spreads between the U.S. and Canada did not reflect the softer Canadian dollar.
“You would expect to see some more Canadian dollar strength coming through...The focus has been on the majors and what you’d call your classic risk trades.”
The yen and Swiss franc outperformed as the greenback .DXY fell against a basket of major currencies. The euro and sterling also outperformed the Canadian dollar.
Talk that U.S. President Donald Trump could face the threat of impeachment weighed on risk-sensitive assets, including richly valued stocks.
The currency traded in a range of C$1.3573 and C$1.3641 during the North American session.
Sahota said there was still room for the USD/CAD to unwind and move back close to C$1.35 area. Earlier this month, the Canadian dollar touched a 14-month low at C$1.3793 on an uncertain trade outlook with the United States and troubles at an alternative mortgage lender.
Mexican Economy Minister Ildefonso Guajardo said on Tuesday he expects Trump’s administration to tell Congress early next week of plans to renegotiate the North American Free Trade Agreement, a move that would produce talks by late August.
Losses for the loonie came even as prices of oil, one of Canada’s major exports, climbed. U.S. crude CLc1 prices were up 0.72 percent to $49.01 a barrel after U.S. crude inventories declined for the sixth straight week, a positive signal for markets ahead of an expected decision by the Organization of the Petroleum Exporting Countries to extend supply cuts.
In domestic data, manufacturing sales rebounded 1.0 percent in March, driven by gains in the motor vehicle sector and record sales in the food industry, figures from Statistics Canada showed.
Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 8 Canadian cents to yield 0.660 percent and the 10-year CA10YT=RR climbing C$1.14 to yield 1.447 percent.
Reporting by Solarina Ho and Fergal Smith; Editing by Meredith Mazzilli and Diane Craft