Canadian dollar edges off two-week low as oil rebounds

The Canadian dollar CADUSD strengthened against its U.S. counterpart on Thursday, recovering from a nearly two-week low, but the move was limited as global equity markets lost ground and domestic data showed wholesale trade rising less than expected in November.

Canadian wholesale trade increased by 0.5 per cent in November from October on higher sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada said. Analysts had forecast an increase of 1.9 per cent.

Stocks have been falling this week as economic data in the United States renewed fears of a global recession, but the price of oil, one of Canada’s major exports, regained some of the ground it lost on Wednesday.

U.S. crude prices rose 0.7 per cent to $80.02 a barrel, while the Canadian dollar was trading 0.3 per cent higher at 1.3455 to the greenback, or 74.32 U.S. cents, after touching its weakest intraday level since Jan. 6 at 1.3520.

Separate domestic data showed that home prices fell 1.1 per cent in December from the previous month, extending their decline from a peak in May.

Home prices have declined in the face of the Bank of Canada’s aggressive interest rate increases to tackle inflation. The Canadian central bank lifted its benchmark rate in December to a 15-year high of 4.25 per cent.

Money markets see a roughly 60 per cent chance that it will further raise the policy rate by a quarter of a percentage point next Wednesday, and expect that rate to peak at 4.50 per cent.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year was up 4.6 basis points at 2.769 per cent, after earlier touching its lowest level since Aug. 16 at 2.701 per cent.

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