Canadian dollar slips as trade balance swings to surprise deficit

TORONTO: The Canadian dollar weakened against its US counterpart on Tuesday as the greenback broadly climbed and data showed Canada's trade balance swinging to a surprise deficit in March, with the loonie pulling back from a recent 3-year high.

Canada's trade deficit was C$1.1 billion in March, Statistics Canada said. Analysts had predicted a surplus of C$700 million after a revised C$1.4 billion surplus in February.

Separate data showed that the value of Canadian building permits rose by 5.7% in March from February.

Robust housing construction and resales have bolstered the outlook for Canada's economy after it was hammered in 2020 by the coronavirus crisis. Last month, the Bank of Canada projected that GDP would increase 6.5% this year.

The Canadian dollar was trading 0.3% lower at 1.2316 to the greenback, or 81.20 US cents, having traded in a range of 1.2274 to 1.2345. Last Friday, the loonie touched its strongest since February 2018 at 1.2262.

The US dollar rose against a basket of major currencies, partially unwinding a month-long decline, as risk appetite faded with investors awaiting upcoming data and policy speeches for clues.

The price of oil, one of Canada's major exports, climbed after more US states eased lockdowns and the European Union sought to attract travelers, though soaring COVID-19 cases in India capped gains. US crude prices were up 1.2% at $65.27 a barrel.

Canadian government bond yields were mixed across the curve, with the 10-year unchanged at 1.522%.