The Canadian dollar edged higher against its U.S. counterpart on Thursday, posting a modest gain despite a drop in oil prices and a more dovish stance from the Bank of Canada the day before.
At 4:08 p.m. ET, the Canadian dollar was trading 0.1 per cent higher at 1.3485 to the greenback, or 74.16 U.S. cents.
The currency, which hit a nearly four-month low on Wednesday at 1.3522, traded in a range of 1.3484 to 1.3517. For the week, it is down 0.7 per cent.
“Most of the decline this week is pure U.S. dollar strength,” said Adam Button, chief currency analyst at ForexLive. “In the big picture the Canadian dollar is holding up well and today it is holding up well despite a drop in oil.”
The price of oil, one of Canada’s major exports, fell as investors second-guessed the market’s ability to rally further. U.S. crude oil futures , which notched a nearly six-month high on Tuesday, settled 1 per cent lower at $65.21 a barrel.
The Bank of Canada held its benchmark interest rate steady at 1.75 per cent on Wednesday as expected and removed wording about the need for future rate hikes. The central bank lowered its growth forecast for 2019 to 1.2 per cent from 1.7 per cent but it saw an upside risk from stronger growth in the United States.
“Some positive spillovers from the U.S. will start to emerge for the Canadian economy and the Canadian dollar,” Button said.
Data showing new orders for U.S.-made capital goods increased by the most in eight months in March helped support the U.S. dollar , which notched its highest level in about two years against a basket of major currencies.
The number of Canadian nonfarm payroll employees rose by 31,700 in February from January, while average weekly earnings slowed on an annual basis to 1.1 per cent from 1.9 per cent, data from Statistics Canada showed.
Canadian government bond prices were lower across much of the yield curve, with the two-year down 7 cents to yield 1.550 per cent and the 10-year falling 27 cents to yield 1.704 per cent.
On Wednesday, the 10-year yield hit its lowest intraday since April 2 at 1.649 per cent.