TORONTO, July 7 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Tuesday as oil prices rose and Canada's trade data added to evidence that the domestic economy rebounded in the second quarter.
The loonie was trading 0.1% higher at 1.4190 per U.S. dollar, or 70.47 U.S. cents, after moving in a range of 1.4189 to 1.4226.
Canada's trade surplus widened to a four-year high of C$4.24 billion ($2.98 billion) in May as exports rose for the fourth consecutive month.
"Canadian trade surpluses can come and go quickly with swings in oil prices, and this is probably the high watermark for now," Robert Kavcic, a senior economist at BMO Capital Markets, said in a note.
"Still, net exports look to add firmly to growth in Q2, another data point that suggests the Canadian economy has snapped out of its two-quarter funk," Kavcic said.
Canada's economy contracted at an annualized rate of 0.1% in the first quarter after a 1% contraction in the final three months of 2025.
The price of oil, one of Canada's major exports, rose after reports of attacks on vessels near the Strait of Hormuz revived fears of disruptions to shipping through the critical energy transit route.
U.S. crude oil futures were trading 2.8% higher at $70.47 a barrel, while the U.S. dollar edged higher against a basket of major currencies.
Canada and Turkey have formally launched negotiations for a free-trade agreement, Canadian Prime Minister Mark Carney's office said.
Canadian employment data, due on Friday, can offer additional clues on the state of the domestic economy. Investors expect a jobs gain of 10,000 and the unemployment rate to hold steady at 6.6%.
Canadian government bond yields moved higher across the curve. The 10-year was up 4.8 basis points at 3.467%, trading near the top of its range in recent weeks.
Reporting by Fergal Smith; Editing by Andrea Ricci
