TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday as oil prices rebounded on expectations that falling crude prices may lead to production cuts, while stronger-than-expected Chinese trade data also helped.
The price of oil, one of Canada’s major exports, was also supported by steadying of the yuan currency after a week of turmoil spurred by an escalation in U.S.-China trade tensions. U.S. crude oil futures CLc1 were up 2.5% at $52.38 a barrel
Canada runs a current account deficit and exports many commodities, including oil, so its economy is strongly affected by changes in commodity prices.
At 9:41 a.m. (1341 GMT), the Canadian dollar CAD=D4 was trading 0.1% higher at 1.3289 to the greenback, or 75.25 U.S. cents. The currency, which touched near its seven-week low on Wednesday, has been on a losing streak since the beginning of the week.
Data released on Thursday showed Chinese exports rose 3.3% in July from a year earlier; analysts had expected a fall of 2%. Policymakers, meanwhile, fixed the daily value of the yuan at a firmer level than many had expected.
The recovery of the loonie came as the long-term outlook for the currency came out positive. The Canadian dollar could strengthen against its U.S. counterpart over the coming year, recovering ground lost since July, as Canada’s economy stays strong enough to withstand global trade uncertainty, a Reuters poll predicted.
Meanwhile, new home prices in Canada fell 0.1% in June, for the second month in a row, domestic data showed. Prices have been flat or falling since August 2018.
Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR down 1.5 Canadian cents to yield 1.368% and the 10-year CA10YT=RR rising 8 Canadian cents to yield 1.235%.
Reporting by Levent Uslu; editing by Jonathan Oatis