TORONTO (Reuters) - The Canadian dollar strengthened to a near one-week high against its U.S. counterpart on Wednesday as the greenback broadly fell and domestic data showed a narrower-than-expected trade deficit.
Canada’s trade deficit in April shrank to a six-month low of C$1.90 billion from C$3.93 billion in March, as exports climbed to a record high and imports dropped, Statistics Canada said. The shortfall was considerably less than the C$3.40 billion deficit forecast by analysts.
The U.S. dollar fell against a basket of major currencies after officials said the European Central Bank could wind down its stimulus program by end-2018, boosting the euro.
At 9:05 a.m. EDT (1305 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent higher at C$1.2880 to the greenback, or 77.64 U.S. cents. The currency touched its strongest level since May 31 at C$1.2857.
The loonie was pressured on Tuesday by the prospect of U.S. President Donald Trump moving toward bilateral discussions on trade with Canada and Mexico.
On Wednesday, signs of easing trade tensions between the U.S. and China helped boost stocks.
The price of oil, one of Canada’s major exports, fell even after Venezuela raised the prospect of a halt to some crude exports.
U.S. crude CLc1 prices were down 0.6 percent at $65.16 a barrel.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries and German Bunds. The two-year CA2YT=RR fell 5.5 Canadian cents to yield 1.947 percent and the 10-year CA10YT=RR declined 37 Canadian cents to yield 2.295 percent.
In separate data, the value of Canadian building permits fell by 4.6 percent in April from March, the biggest decline in five months.
Canada’s employment report for May is due on Friday.
Reporting by Fergal Smith; Editing by Nick Zieminski