The Canadian dollar CADUSD edged higher against its U.S. counterpart on Monday as domestic data showed wholesale trade notching its biggest monthly advance since November 2021, but the gain for the currency was modest after a setback on Friday.
The loonie was trading 0.2 per cent higher at 1.3185 to the greenback, or 75.84 U.S. cents, after moving in a range of 1.3161 to 1.3232.
On Friday, it gave back some of its recent rally after posting a 10-month high at 1.3090.
The price action is a sign “that people were using the new high on the loonie to take that opportunity to sell loonies instead of extend that rally,” said Jay Zhao-Murray, a market analyst at Monex Canada Inc.
“It shows that, while we are bullish over the medium term, it’s going to be a rocky road and we don’t think we are going to see too much upside on the loonie from here over the next couple of months.”
Canadian wholesale trade grew by 3.5 per cent in May from April, helped by higher sales in the machinery, equipment and supplies subsector, data from Statistics Canada showed.
The data adds to evidence of the economy picking up in May. Still, analysts expect data on Tuesday to show that Canadian inflation slowed to an annual rate of 3 per cent in June, moving back within the BoC’s target range of 1 per cent to 3 per cent.
The central bank has shifted to a less prescriptive messaging strategy than it used in January when it signaled a rate-hike pause that reignited the housing market.
The price of oil, one of Canada’s major exports, settled 1.7 per cent lower at $74.15 a barrel, while Canadian bond yields rose across the curve
The 10-year was up 3.1 basis points at 3.398 per cent.