August 22, 2019 / 2:08 PM / 24 days ago

Canadian dollar rises as oil prices increase, Powell speech in focus

FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Thursday, adding to the previous day’s gains, as oil prices increased and investors awaited the Federal Reserve chairman’s speech.

The price of oil, one of Canada’s major exports, rose on a drop in U.S. crude inventories and OPEC-led supply cuts, although worries about the global economy capped gains. U.S. crude oil futures CLc1 were up 1% at $56.11 a barrel.

Fed Chairman Jerome Powell’s speech on Friday in Jackson Hole, Wyoming, could indicate whether the U.S. central bank will continue to cut interest rates, which could also help guide expectations about the Bank of Canada’s interest rate decision.

Last month, the Bank of Canada highlighted the risks that trade wars pose to the global economy as it left its benchmark interest rate unchanged at 1.75%.

The Canadian dollar CAD=D4 was trading 0.1% higher at 1.3283 to the greenback, or 75.28 U.S. cents at 9:26 a.m. ET(1326 GMT). The currency, which rallied on Wednesday on stronger-than-expected domestic inflation data, was trading in a range of 1.3276 to 1.3315.

Canada’s annual inflation rate held steady in July at 2% as lower costs for services were offset by higher prices for durable goods, beating estimates for a 1.7% inflation rate.

The rise for the loonie came as domestic data showed a 0.6% increase in Canadian wholesale trade in June from May. Analysts surveyed by Reuters had forecast a 0.3% increase.

Canada’s retail sales data is due on Friday, with a Reuters poll estimating a 0.1% decrease.

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 5.5 Canadian cents to yield 1.437% and the 10-year CA10YT=RR falling 39 Canadian cents to yield 1.263%.

Reporting by Levent Uslu; editing by Nichola Saminather and Jonathan Oatis

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