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Canadian dollar rises 0.3% against the greenback
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Canada's trade deficit narrows in December
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Price of U.S. oil settles 4.1% higher
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10-year yield touches its highest since Jan. 11
(Adds strategist quotes and details throughout; updates prices)
By Fergal Smith
TORONTO, Feb 7 (Reuters) - The Canadian dollar rallied
against its U.S. counterpart on Tuesday, recovering from a
two-week low, as comments by the chief policymakers at the Bank
of Canada and the Federal Reserve calmed investor jitters about
the interest rate outlook.
The loonie was trading 0.3% higher at 1.3410 per U.S.
dollar, or 74.57 U.S. cents, after trading in a range of 1.3381
to 1.3468.
On Tuesday, it touched its weakest since Jan. 20 at 1.3475
as investors worried that a blockbuster U.S. jobs report on
Friday would spur a more hawkish outlook from Fed Chair Jerome
Powell than at an interest rate decision last week.
The Canadian dollar "tracked broad-based USD weakness," said
George Davis, chief technical strategist at RBC Capital Markets.
"Powell did not walk back his more dovish commentary from
last week’s hike, which was a bit of a letdown to some who
expected some changes after Friday’s strong employment report."
Wall Street rallied and the U.S. dollar lost ground
against a basket of major currencies as Powell declined to
equate the surprising strength in the job market with an
expectation that interest rates would need to be higher than
previously thought.
The price of oil, one of Canada's major exports, settled up
4.1% at $77.14 a barrel on reduced rate hike concerns and
recovering demand in China.
Bank of Canada Governor Tiff Macklem also spoke, saying that
no further interest rate hikes will be needed if, as expected,
the economy stalls and inflation comes down.
Canada posted a C$160 million ($119.1 million) trade deficit
in December as energy products dragged down exports and slower
economic growth weighed on consumer goods imports.
The Canadian 10-year yield touched its highest
since Jan. 11 at 3.109% before dipping slightly to 3.100%, up 4
basis points on the day.
(Reporting by Fergal Smith
Editing by Nick Zieminski)
