C$ rises to 5-day high as wholesale trade jumps in April

CANADA-FOREX/:CANADA FX DEBT-C$ rises to 5-day high as wholesale trade jumps in April

Reuters
First Published27 May 2024
C$ rises to 5-day high as wholesale trade jumps in April
C$ rises to 5-day high as wholesale trade jumps in April

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Canadian dollar gains 0.2% against the greenback

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Touches its strongest since last Wednesday

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Flash estimate shows wholesale trade up 2.8% in April

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Canadian bond yields rise across the curve

By Fergal Smith

TORONTO, May 27 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday as preliminary domestic data showed wholesale trade increasing in April and after speculators raised their bearish bets on the currency to the highest level in nearly seven years.

The loonie was trading 0.2% higher at 1.3630 to the U.S. dollar, or 73.37 U.S. cents, its strongest level since last Wednesday. Trading in currency markets was thinned out by holidays in Britain and the United States.

Canadian wholesale trade rose 2.8% in April from March, largely driven by higher sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada said in a flash estimate.

Gross domestic product data is awaited on Friday, expected to show the Canadian economy expanding at an annualized rate of 2.2% in the first quarter. That would be slower than the 2.8% pace that the Bank of Canada forecast in April.

"The economy started the year off strongly, with a huge January GDP print. However, momentum faded as the quarter progressed," said Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets.

Investors see a roughly 60% chance the central bank begins an interest rate cutting campaign at a policy announcement next week, which could mark the start of policy divergence with the Federal Reserve.

Net short positions in the Canadian dollar increased to 90,824 contracts as of May 21 from 80,303 in the prior week, marking the highest since June 2017, data from the U.S. Commodity Futures Trading Commission showed on Friday.

The price of oil, one of Canada's major exports, rose for a second straight day on Monday, gaining 1.3% to $78.73 a barrel.

Canadian government bond yields moved higher across the curve, with the 10-year up 1.6 basis points at 3.625%. (Reporting by Fergal Smith; Editing by Andrea Ricci)

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