TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday, building on gains from the day before as oil prices rallied and data showed that Canada ran a smaller-than-expected current account deficit in the third quarter.
The country’s current account deficit narrowed to C$10.34 billion in the third quarter from a revised C$16.68 billion deficit in the second quarter, Statistics Canada said. Analysts had forecast a deficit of C$11.50 billion. [nSCLTMEEBW]
The improvement reflected better prices for Canada’s exports that have since “melted away,” said Avery Shenfeld, chief economist at CIBC Capital Markets.
The price of oil, one of Canada’s major exports, has slumped more than 30 percent since October.
But U.S. crude CLc1 prices were 1.8 percent higher on Thursday at $51.20 a barrel, after industry sources said Russia had accepted the need to cut production, together with the Organization of the Petroleum Exporting Countries. [nL4N1Y41QQ]
At 9:58 a.m. (1458 GMT), the Canadian dollar CAD=D4 was trading 0.1 percent higher at 1.3265 to the greenback, or 75.39 U.S. cents. The currency traded in a range of 1.3254 to 1.3314.
On Wednesday, the loonie hit a five-month low intraday at 1.3360 before rallying on comments from Federal Reserve Chairman Jerome Powell that were seen as dovish by some investors.
Market players have also been weighing prospects for U.S.-China trade talks at the G20 Summit. [nL4N1Y44JV]
U.S. Trade Representative Robert Lighthizer said on Wednesday that he was examining all available tools to raise U.S. tariffs on Chinese vehicles to the 40 percent duties that China is now charging on U.S.-produced vehicles. [nL2N1Y32CM]
In addition to being a major commodities exporter, Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows.
Canada’s gross domestic product data for the third quarter is due on Friday.
Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries, with the 10-year CA10YT=RR climbing 18 Canadian cents to yield 2.306 percent.
The 10-year yield touched its lowest intraday since Sept. 10 at 2.289 percent.
Reporting by Fergal Smith; Editing by Susan Thomas