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Canadian dollar climbs off 11-day low as oil prices rise

FILE PHOTO: U.S. and Canada Dollar notes are seen in this June 22, 2017 illustration photo. REUTERS/Thomas White/Illustration/File Photo

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Tuesday, rebounding from an earlier 11-day low as higher oil prices offset weaker-than-expected domestic manufacturing data.


At 3:09 p.m. (1909 GMT), the Canadian dollar was trading 0.1% higher at 1.3352 to the greenback, or 74.90 U.S. cents. The currency touched its weakest intraday since April 5 at 1.3403.

The price of oil, one of Canada's major exports, rose as fighting in Libya and falling Venezuelan and Iranian exports raised concerns over tightening global supply.

U.S. crude oil futures settled 1% higher at $64.05 a barrel.

"Higher oil prices are helping the Canadian dollar," said Eric Viloria, an FX strategist at Crédit Agricole CIB. "They offered some cushion surrounding the weaker manufacturing sales."

Canadian factory sales were down by 0.2% in February from January on lower sales of motor vehicles, as well as wood products, Statistics Canada said. Analysts had forecast no change.

On Monday, a Bank of Canada quarterly survey showed that Canadian business sentiment has turned slightly negative, weighed by a weak energy sector, a housing slowdown and global trade tensions.

"What we have seen is that there is still some soft Canadian data ... it would need to show some more meaningful improvement before the Canadian dollar can break out of its recent range," Viloria said.

The loonie was nearly unchanged for the month of April after having climbed 2.2% since the start of 2019.

Canada's inflation report for March and February trade data are due on Wednesday.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries as investors favored riskier assets, such as stocks.

The two-year fell 4.5 Canadian cents to yield 1.631% and the 10-year was down 23 Canadian cents to yield 1.783%.

The Canadian province of Ontario, the world's biggest sub-sovereign debtor, faces an uphill task to balance the books in the coming years after its government failed to deliver a "trophy" cost saving in last week's budget, bond investors say.


(Reporting by Fergal Smith; Editing by Steve Orlofsky and Sandra Maler)