The Canadian dollar edged higher against its U.S. counterpart on Thursday as the greenback broadly fell and Canada’s government weighed a proposal which could help soften the blow from price discounts on heavy crude generated by pipeline congestion.
At 9:57 a.m., the Canadian dollar was 0.1 per cent higher at 1.3225 to the greenback, or 75.61 U.S. cents, in holiday impacted trading with U.S. markets shut for Thanksgiving.
The loonie, which touched on Tuesday its weakest in nearly five months at 1.3318, traded in a range of 1.3214 to 1.3245.
Canada’s federal government is considering a proposal from its main oil producing province of Alberta to share the cost of buying rail cars to move oil stuck in the region because of a lack of pipeline capacity, two sources with direct knowledge of the matter said.
Western Canada Select (WCS) oil traded last month as much as $52.50 per barrel below West Texas Intermediate light oil, its biggest differential in data going back to 2010, according to Shorcan Energy Brokers.
Recent weakening in the price of U.S. oil has added to headwinds for Canada’s oilpatch. On Thursday, oil prices fell after U.S. crude inventories swelled to their highest level since December, adding to concerns about a global glut but OPEC talk of an output reduction limited losses.
U.S. crude prices were down 0.3 per cent at $54.47 a barrel, while the U.S. dollar fell against a basket of major currencies after Britain and the European Union agreed in principle to a text setting out their future relationship before a summit on Sunday, boosting the euro and sterling.
Canada will allow businesses to write off additional capital investments to make them more competitive at a time when the United States is aggressively cutting taxes, Finance Minister Bill Morneau said on Wednesday.
Canadian government bond prices were lower across the yield curve, with the two-year down 1.5 cents to yield 2.242 per cent and the 10-year falling 8 cents to yield 2.371 per cent.
Canada’s inflation report for October and September retail sales data are due on Friday.