Canadian dollar sticks near three-month high as stimulus measures weigh on greenback
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Thursday as stocks fell and domestic data showed a plunge in exports, but global stimulus measures helped temper the decline, with the currency holding near an earlier three-month high.
The Canadian dollar <CAD=> was trading 0.1% lower at 1.3508 to the greenback, or 74.03 U.S. cents. The currency touched its strongest intraday level since March 9 at 1.3468.
"The CAD is holding near three-month highs largely because of broad, risk-on, USD sales that came in during the ECB's press conference this morning," said Erik Bregar, head of FX strategy at the Exchange Bank of Canada.
The safe-haven U.S. dollar <.DXY> fell against a basket of major currencies after a decision by the European Central Bank to ramp up an emergency asset-purchase program to shore up economies hurt by the coronavirus crisis bolstered the euro.
Canada's central bank has also launched an asset-purchase program. It sees reason to be optimistic about the country's economic recovery but is keeping a close eye on how COVID-19 is affecting growth and demand in its key export markets, Bank of Canada Deputy Governor Toni Gravelle said.
Canada posted a trade deficit of C$3.25 billion in April as exports fell by nearly 30% to the lowest level in more than 10 years at C$32.7 billion. Analysts had forecast exports would be C$42.1 billion.
Wall Street retreated as investors hit the pause button in advance of Friday's jobs report, while the price of oil <CLc1>, one of Canada's largest exports, settled 0.3% higher.
The loonie is likely to slip in coming months as a collapse in global trade and the prospect of a more prolonged slowdown from the pandemic put pressure on the currency, a Reuters poll showed.
Canada's 10-year yield <CA10YT=RR> rose 5.8 basis points to 0.675%, its highest since April 15.
(Reporting by Fergal Smith; Editing by Nick Zieminski and Peter Cooney)
