TORONTO, May 25 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday as hopes rose of a deal to end the war in the Middle East and ahead of a speech by a Bank of Canada policymaker that could offer clues on the interest rate outlook.
The loonie was trading 0.1% higher at 1.3800 per U.S. dollar, or 72.46 U.S. cents, after moving in a range of 1.3796 to 1.3823. On Friday, the currency touched a near six-week low at 1.3824.
"The near-term focus for the CAD remains centered on the outlook for relative central bank policy, given the material widening in interest rate differentials that has reflected a softer repricing of the BoC’s path along with a firming in the outlook for the Fed (U.S. Federal Reserve)," Shaun Osborne and Eric Theoret, strategists at Scotiabank, said in a note.
Nicolas Vincent, External Deputy Governor of the Bank of Canada, is due to speak on Tuesday on the labour market and structural change in the Canadian economy.
Canada's 2-year yield was trading about 128 basis points below its U.S. equivalent, with the gap widening from 102 basis points mid-month.
Iran's top negotiator and its foreign minister were in Doha for talks with Qatar's prime minister on a potential deal with the U.S. to end the three-month-old war, an official briefed on the visit said.
Equity markets globally rallied, the U.S. dollar (.DXY), fell against a basket of major currencies and the price of oil , one of Canada's major exports, was down 6.5% at $90.36 a barrel.
Domestic data had little impact - a preliminary reading showed that wholesale trade rose 0.1% in April from March.
Canadian bond yields moved lower across the curve. The 10-year was down 6.8 basis points at 3.465%.
Reporting by Fergal Smith, Editing by Nick Zieminski
