The Canadian dollar edged higher against its U.S. counterpart on Thursday as oil prices jumped and investors assessed upbeat domestic retail sales data.
The loonie was trading 0.1% higher at 1.4075 per U.S. dollar, or 71.05 U.S. cents, after moving in a range of 1.4058 to 1.4099. It was the only Group of 10 currency to gain ground against the greenback.
Canadian retail sales rose 1% in May, matching expectations, as sales at gasoline stations and fuel vendors led broad-based gains. For June, a preliminary estimate showed sales up 0.4%.
“Beyond the gas price increase, retail sales were solid in May, and a decent flash for June adds to the encouraging news,” said Shelly Kaushik, a senior economist at BMO Capital Markets.
“The economy seemed to be building momentum in Q2, although additional challenges - more tariffs, extreme weather, and the renewed energy price shock - wait in the second half of the year.”
The price of oil, one of Canada’s major exports, jumped 6.2% to $92.40 a barrel after Yemen’s Houthis said they had attacked two Saudi oil tankers in the Red Sea, adding to concerns over global supply disruptions.
Higher oil prices fanned inflation fears, lifting expectations the Federal Reserve may hike interest rates and boosting the U.S. dollar against a basket of major currencies.
Canada will do whatever it takes to defend its workers, farmers and businesses in a trade war with the U.S., Prime Minister Mark Carney told a meeting of provincial premiers.
Speculators raised their bearish bets on the Canadian dollar to the highest level among the major currencies in the weeks before U.S. President Donald Trump announced new tariffs on Canada, helping push the loonie to a recent 14-month low.
Canadian government bond yields moved higher across the curve as expectations for Bank of Canada interest rate hikes also rose. The 10-year was up 5.1 basis points at 3.643%, after earlier touching its highest level since May 20 at 3.665%.