Canadian dollar consolidates recent gains as inflation cools

By Fergal Smith

TORONTO (Reuters) -The Canadian dollar was barely changed against its U.S. counterpart on Tuesday, with investors taking stock of recent gains for the currency as domestic data showed inflation cooling to the lowest level in 19 months.

The loonie was trading nearly unchanged at 1.3390 to the greenback, or 74.68 U.S. cents, after moving in a range of 1.3361 to 1.3399.

Still, the currency has advanced more than 3% since mid-March as the price of oil, one of Canada's major exports, rallied and stress in the global banking sector eased.

The currency "is taking a little bit of time to consolidate its gains," said Michael Goshko, senior market analyst at Convera Canada ULC.

It would take a move above the 200-day moving average at about 1.3405 and then Monday's high of 1.3417 to upset the current trend in USD-CAD, Goshko said.

Canada's annual inflation rate eased to 4.3% in March from 5.2% in February, matching expectations, as a decline in energy prices helped offset a record spike in mortgage costs.

"Markets largely shrugged off the report," said Jay Zhao-Murray, a market analyst at Monex Canada Inc.

"With virtually every number meeting expectations, there isn't much reason for the market to change its expectations for what the Bank of Canada will do this year."

The Canadian central bank is expected to leave its policy rate on hold at 4.50% through the rest of 2023, money market data showed.

The U.S. dollar lost ground against a basket of major currencies and oil settled 3 cents higher at $80.66 a barrel, as investors weighed stronger-than-forecast GDP data from China.

The Canadian 10-year yield eased 5.5 basis points to 3.046%, after earlier touching its highest level since March 10 at 3.107%.

(Reporting by Fergal Smith; Editing by Nick Zieminski and Jonathan Oatis)