TORONTO, Aug 27 (Reuters) - The Canadian dollar clawed back some of this week's declines against its U.S. counterpart on Thursday as oil prices rose and after data showed Canada posted its first current account surplus in four years.
The loonie was trading 0.2% higher at 1.3855 per U.S. dollar, or 72.18 U.S. cents, after moving in a range of 1.3853 to 1.3891.
On Wednesday, the currency touched a one-week low at 1.3892 as investors worried new U.S. tariffs on Canada's goods could hurt the domestic economy after it showed signs of recovery in the second quarter
"The CAD has held up relatively well despite the renewed escalation in trade tensions, though risks remain tilted to the downside," said Tony Valente, a senior FX dealer at AscendantFX
"The CAD’s resilience so far suggests the market is not yet pricing in a worst-case outcome, and any meaningful de-escalation in trade tensions could quickly bring buyers back," Valente said
Canada removed seafood and fish products from a list of counter-tariffs on U.S. imports on Wednesday, a day after announcing levies on about $20 billion worth of American products
Canada's current account balance swung to a surplus of C$8.84 billion ($6.37 billion) in the second quarter from a first-quarter deficit of C$8.31 billion, led by strong gains in goods exports, including energy products
Economists had forecast a deficit of C$2 billion, while they expect second-quarter GDP data on Friday to show the economy expanded at an annualized rate of 3.4%
The price of oil, one of Canada's major exports, rose as Washington confirmed it was not in talks with Tehran despite diplomatic efforts by other countries. U.S. crude oil futures were up 0.5% at $82.62
Canadian government bond yields were mixed across a steeper curve, with the 10-year up 2 basis points at 3.677%
Still, the 10-year yield was down about 9 basis points since the start of the week, the most among G7 sovereign bonds
Reporting by Fergal Smith Editing by Rod Nickel
