TORONTO, Aug 5 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as the greenback posted broad-based declines and recent domestic data lent support to the loonie.
The loonie was trading 0.3% higher at 1.4025 per U.S. dollar, or 71.30 U.S. cents, after moving in a range of 1.4015 to 1.4080.
"We still rather think there is a case for some modest fundamental improvement in the Canadian dollar — based on stable front-end spreads and relative data surprises," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.
Canada's 2-year yield was trading about 136 basis points below the equivalent U.S. rate, with the gap narrowing from 145 basis points last week.
Canada's trade surplus hit a four-year high in June and the manufacturing sector expanded in July at the fastest pace in more than four years, data on Tuesday showed.
Recent preliminary data has pointed to the economy growing by 3.4% in the second quarter on an annualized basis.
Canadian employment data, due on Friday, could offer further clues on the state of Canada's economy. Analysts expect a gain of 15,000 jobs.
The U.S. dollar (.DXY), edged lower against a basket of major currencies as revived hopes of an end to the war with Iran blunted safe-haven demand.
The price of oil, one of Canada's major exports, was trading 1.4% lower at $74.75 a barrel.
Canadian government bond yields edged higher across the curve, with the 10-year up 1.9 basis points at 3.568%.
Reporting by Fergal Smith; Editing by Paul Simao
