The Canadian dollar CADUSD rebounded from a near one-week low against its U.S. counterpart on Thursday as an indication of cooler U.S. inflation left the door open to Federal Reserve interest rate cuts this year.
The loonie was trading 0.3% higher at 1.3675 to the U.S. dollar, or 73.13 U.S. cents, after earlier touching its weakest level since Friday at 1.3734.
“The Canadian dollar has essentially reversed its risk-off losses from Wednesday today,” said Simon Harvey, Head of FX analysis for Monex Europe and Monex Canada.
Domestic employment data helped the currency but the biggest driver was U.S. data that eased concern over persistent inflation, Harvey said.
Canadian payroll employment rose by 51,400 in March following an increase of 14,600 in February, Statistics Canada said.
The U.S. economy grew more slowly in the first quarter than previously estimated after downward revisions to consumer spending and a key measure of inflation ticked down, keeping the Fed on track to possibly begin cutting interest rates at least once before the end of the year.
Investors were awaiting Canadian gross domestic product data on Friday, expected to show the economy expanding at an annualized rate of 2.2% in the first quarter. Still, that would be slower than the Bank of Canada’s most recent forecast of 2.8%.
The BoC said on Thursday it will bring payment service providers under more supervision and launch a real-time payments system over the next two to three years in efforts to modernize the country’s financial architecture.
The price of oil, one of Canada’s major exports, fell 1.8% to $77.77 a barrel ahead of an OPEC+ meeting this weekend.
Canadian bond yields fell across the curve, tracking moves in U.S. Treasuries. The 10-year was down 6.3 basis points at 3.697%, after earlier touching a four-week high at 3.783%.