TORONTO — The Canadian dollar edged lower against its U.S. counterpart on Wednesday but the move was limited as oil extended recent gains and investors awaited a key U.S. inflation report this week.
The price of oil, one of Canada’s major exports, rose for a fifth consecutive day as investors weighed an unexpected build in U.S. crude inventories, global economic uncertainty and China reopening its economy.
U.S. crude prices were up 1.8% at $76.46 a barrel, while stock markets globally climbed on hopes that inflation was being tamed enough to ease the pace of interest rate hikes and reduce the chances of a deep recession.
U.S. consumer price index data for December is due on Thursday.
The Canadian dollar was trading 0.1% lower at 1.3430 to its U.S. counterpart, or 74.46 U.S. cents, after moving in a range of 1.3405 to 1.3445.
On Monday, it touched a six-week high at 1.3355, helped by recent improvement in risk appetite and domestic jobs data that has raised expectations for further tightening by the Bank of Canada.
The United States, Mexico and Canada vowed to tighten economic ties, producing more goods regionally and boosting semiconductor output, even as integration is hampered by an ongoing dispute over Mexico’s nationalist energy policies.
Canadian government bond yields were lower across the curve. The 10-year touched its lowest since Dec. 22 at 3.057% before recovering slightly to 3.070%, down 5 basis points on the day.
Canada is due to auction C$4 billion ($2.98 billion) of 5-year bonds, with the bidding deadline set for 12 p.m. ET (1600 GMT). (Reporting by Fergal Smith Editing by Tomasz Janowski)