NEWS / Trade Policy

Canadian dollar dips after US data

Canadian bond prices edged higher, but further moves could be tied to comments by U.S. Federal Reserve speakers given the absence of Canadian data during the session.

At 8:55 a.m. EST, the currency was at C$1.1175 to the U.S. dollar, or 89.48 U.S. cents, down from C$1.1129 to the U.S. dollar, or 89.85 U.S. cents, at Thursday's North American close.

After getting rattled by sharp drops in commodity prices, the Canadian dollar has managed to steady itself.

Oil prices fell sharply earlier this week on concern that high prices were stoking inflation and putting pressure on central banks to raise interest rates, which could cut demand for raw materials.

Fairly steady oil prices and a 3-percent jump in gold prices on Friday helped cushion the Canadian dollar's slide following data out of the United States that showed the current account gap narrowed more than expected.

"I think in general the Canadian dollar has lost a bit of steam in recent weeks and seems to be trading in a relatively tight range between C$1.110 and C$1.120 and those seem to be the boundaries for the currency for now," said Doug Porter, senior economist at BMO Nesbitt Burns.

The U.S. dollar seemed to gather some momentum after data showed the U.S. current account deficit narrowed in the first quarter to $208.7 billion.

The University of Michigan consumer index, due out at 9:45 a.m. is not expected to have an impact on the currency market unless it arrives weaker than expected. The consensus call is for the measure to be 79.0.

BONDS POST SLIGHT REBOUND

Canadian bond prices were up slightly following recent declines. And with little data on Friday, it appeared a trio of Fed speakers could have an impact.

Recent comments from Federal Reserve officials sounded a warning on inflation and had the market anticipating a U.S. rate hike on June 29.