TORONTO, June 5 (Reuters) - The Canadian dollar strengthened to nearly an eight-month high against its U.S. counterpart on Thursday as investors shrugged off a record Canadian trade deficit and the greenback oscillated against major peers.
The loonie was trading 0.1% higher at 1.3665 to the U.S. dollar, or 73.18 U.S. cents, after touching its strongest intraday level since October 8 at 1.3635.
"Broader USD flows have been the bigger driver for the Canadian dollar today," said Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull, adding that optimism on U.S.-China trade talks helped the greenback claw back some of its earlier declines.
U.S. President Donald Trump and Chinese leader Xi Jinping confronted weeks of brewing trade tensions and a battle over critical minerals in a rare leader-to-leader call that left key issues to further talks.
The U.S. dollar (.DXY), slipped against the euro after the European Central Bank hinted at a pause in its year-long policy easing cycle and U.S. data pointed to softening labor market conditions amid mounting economic headwinds from tariffs.
Canada's trade deficit in April widened to an all-time high of C$7.1 billion ($5.2 billion) as U.S. tariffs sucked out demand for Canadian goods from the U.S.
Still, Bank of Canada Deputy Governor Sharon Kozicki said Canadian firms and industry associations affected by trade tensions are less worried about a worst-case scenario involving U.S. tariffs and are set to raise prices.
The price of oil, one of Canada's major exports, settled 0.8% higher at $63.37 a barrel, while Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries.
The 10-year was up 1.7 basis points at 3.253%.
Reporting by Fergal Smith; Editing by Paul Simao
