TORONTO: The Canadian dollar was modestly firmer against the US dollar on Wednesday, supported by higher oil prices and weak US data that further pressured the broadly softer greenback.
The US dollar, which had rallied for months, and weak global demand likely dragged on US business investment spending plans, which fell for a sixth straight month in February. The durable goods report is the latest data to suggest economic growth has slowed and could prompt economists to further scale back first-quarter growth forecasts.
"(The Canadian dollar is) just a tad firmer - softer US data probably helped a little on that front. You've gotten broad US dollar weakness since the Fed announcement pretty much," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets.
Last week, the Federal Reserve raised the possibility the next rate hike may not come as early as some market participants had expected when it issued a more cautious outlook for US economic growth and slashed its projected interest rate path.
The weaker US dollar also makes dollar-traded commodities like crude, a major Canadian export, more attractive for holders of other currencies.
"(The weak US dollar's) helped the Canadian dollar perform pretty well, along with most other currencies and you've got oil prices coming back to some extent. Still weak, but well off our lows," said Reitzes. At about 9:27 a.m. (1327 GMT), the Canadian dollar was at C$1.2484 to the greenback, or 80.10 US cents, slightly stronger than Tuesday's close of C$1.2501, or 79.99 US cents.
Markets are looking ahead to a speech by Bank of Canada Governor Stephen Poloz on Thursday for clues on the bank's monetary policy intentions and its outlook on the state of the economy.
Canadian government bond prices were mixed across the maturity curve, with the two-year down 1 Canadian cent to yield 0.470 percent and the benchmark 10-year up 5 Canadian cents to yield 1.299 percent.
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