TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Wednesday as oil prices fell and bond yields hit new lows, while data showed less-than-expected improvement in Canada’s trade deficit.
At 4:23 p.m. (2023 GMT), the Canadian dollar was trading 0.2 percent lower at 1.3406 to the greenback, or 74.59 U.S. cents. The currency, which on Monday touched a two-week low at 1.3445, traded in a range of 1.3377 to 1.3440.
“Dollar-Canada, pretty much like everything else, is stuck in a range,” said Shaun Osborne, chief currency strategist at Scotiabank.
Major currency markets were quiet as risk appetite remained fragile following a sell-off last week triggered by fears of slowing global growth.
Canada’s 10-year yield fell 3.6 basis points further below the yield on the three-month T-bill to a spread of -12.0 basis points. An inverted yield curve is seen by some investors as a leading indicator of recession.
The price of oil, one of Canada’s major exports, fell after government data showed U.S. crude inventories grew more than expected last week as a Texas chemical spill hampered exports. U.S. crude oil futures settled 0.9 percent lower at $59.41 a barrel.
Canada’s trade deficit narrowed in January to C$4.25 billion, as exports grew at a faster rate than imports, Statistics Canada said. Analysts had forecast a deficit of C$3.50 billion.
“The gain in real exports was somewhat constructive for the Canadian growth picture,” Osborne said. “Incrementally, we are getting a little bit more evidence in the early part of Q1 (the first quarter) that growth is picking up a little bit.”
Separate data from Statistics Canada showed that non-farm payroll employees rose by 71,200 in January from December. A previously released monthly survey from Statistics Canada, the Labour Force Survey, also showed strong job gains at the start of the year.
Canada’s gross domestic product data for January is due on Friday.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 7.5 Canadian cents to yield 1.467 percent and the 10-year was up 33 Canadian cents to yield 1.538 percent.
The 10-year yield touched its lowest intraday level since June 2017 at 1.508 percent.
Reporting by Fergal Smith; Editing by Peter Cooney