TORONTO: The Canadian dollar pulled back from an 11-year low against its US counterpart on Wednesday as data showed the country's trade deficit narrowed sharply in June due to soaring exports.
The trade shortfall for the month was far less than analysts had expected and, coupled with disappointing US private-sector jobs data, helped push the loonie back below C$1.32 to the greenback.
The improvement in the trade data was "very surprising and quite large in magnitude," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets. "It makes you wonder if we're finally getting some traction from the currency."
The cheaper currency, with the Canadian dollar hitting its weakest level since 2004 this week, has been expected to lift Canadian exports, though a significant time lag has been expected.
At 9:19 a.m. EDT (1319 GMT), the Canadian dollar was at C$1.3142 to the greenback, or 76.09 US cents, stronger than the Bank of Canada's official close on Tuesday of C$1.3180, or 75.87 US cents.
The currency's strongest level of the session was C$1.3110, while its weakest was C$1.3213.
Mikolich said the data helped prompt "a needed correction with the move higher in the last couple of sessions, but with limited scope here much below C$1.31."
Canadian government bond prices were lower across the maturity curve, with the two-year price down 4 Canadian cents to yield 0.424 percent and the benchmark 10-year falling 26 Canadian cents to yield 1.455 percent.
The Canada-US two-year bond spread was -30.8 basis points, while the 10-year spread was -79.5 basis points.
US crude prices were up 0.9 percent at $46.17 a barrel, while Brent crude added 1.1 percent to $50.55. Oil is a major Canadian export.
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