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TORONTO, June 29 (Reuters) – The Canadian dollar edged higher against its U.S. counterpart on Thursday ahead of data that could help guide expectations for the Bank of Canada, with the currency recovering from a two-week low it hit as the greenback notched broad-based gains.
The loonie was trading 0.1% higher at 1.3240 to the greenback, or 75.53 U.S. cents, after touching its weakest intraday level since June 15 at 1.3285.
“The CAD is looking relatively fairly valued from a fundamental point of view,” said Shaun Osborne, chief currency strategist at Scotiabank. “I don’t expect we will see a lot of softness from here, but a lot depends on how the (U.S.) dollar performs more generally.”
The U.S. dollar index (.DXY) rose to a two-week high after economic data showed the U.S. labor market remained on a solid footing, giving the Federal Reserve a possible cushion to continue raising interest rates.
“We have still got GDP and the Bank of Canada outlook survey tomorrow, which could still persuade markets there’s the risk of certainly one more (rate hike), maybe two more from the bank at this point,” Osborne said.
Canadian GDP data for April, due on Friday, is expected to show the economy growing by 0.2%. The Bank of Canada’s Business Outlook Survey and Canadian Survey of Consumer Expectations are also set for release on Friday.
The BoC’s move to come off the sidelines after a five-month pause has sent a signal that some economic pain will be needed to tame stubborn inflation, leading investors to raise bets on a hard landing for the economy.
Canadian government bond yields climbed across the curve, tracking moves in U.S. Treasuries. The 10-year was up 14.4 basis points at 3.366%.
Reporting by Fergal Smith; editing by Jonathan Oatis
Our Standards: The Thomson Reuters Trust Principles.
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