The Canadian dollar CADUSD was little changed against its U.S. counterpart on Wednesday, with the currency consolidating its recent gains as data showed Canada posting a narrower trade surplus in February.
Canada’s trade surplus narrowed to C$422-million ($313-million) in February from a revised C$1.2-billion in January, driven by widespread declines in both imports and exports. Analysts had forecast a surplus of C$1.8-billion.
Canada’s employment report for March, due to be released on Thursday, could offer further clues on the state of the domestic economy.
The loonie is set to rally over the coming year as an expected slowdown in economic activity stops short of a hard landing for the economy, a Reuters poll showed.
The currency was trading nearly unchanged at 1.3443 to the greenback, or 74.39 U.S. cents, on Wednesday after moving in a range of 1.3427 to 1.3483. On Tuesday, it touched its strongest level since Feb. 16 at 1.3406.
The price of oil was also stable, trading at about $80.70 a barrel, as the market weighed gloomy economic prospects against expectations of U.S. crude inventory declines and plans by OPEC+ producers to reduce output. Oil is one of Canada’s major exports.
Canadian government bond yields were lower across the curve, tracking the move in U.S. Treasuries after the release of data showing that U.S. private employers hired far fewer workers than expected in March.
The 10-year was down 1.2 basis points at 2.759 per cent, while the gap between it and its U.S. equivalent narrowed by 3 basis points to about 54 basis points in favor of the U.S. bond. That was the smallest gap since Feb. 27.
Canada is due to auction C$3.5-billion of 10-year bonds, with the bidding deadline set for 12 p.m. EDT (1600 GMT).