Canadian dollar slips as seasonal trade shifts in favor of greenback

* Canadian dollar weakens 0.2% against the greenback

* Canada posts a C$1.1 billion trade deficit in March

* Price of U.S. oil settles 1.9% higher

* Canada's 10-year yield rises 1.3 basis points to 1.535%

By Fergal Smith

TORONTO, May 4 (Reuters) - The Canadian dollar weakened against its U.S. 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 3-year high.

The Canadian dollar CAD= was trading 0.2% lower at 1.2306 to the greenback, or 81.26 U.S. cents, having traded in a range of 1.2274 to 1.2350.

Last Friday, the loonie touched its strongest intraday level since February 2018 at 1.2262. It was up 2.2% last month and has now strengthened in eight of the past 10 Aprils.

"Given that the (U.S.) dollar has been so badly beaten in April, I think you see some of that pared back and part of that may be related to the seasonal dynamics," said Mazen Issa, senior FX strategist at TD Securities. "May tends to be a much stronger month for the dollar."

The greenback .DXY rallied against a basket of major currencies after U.S. Treasury Secretary Janet Yellen said interest rates may need to rise to prevent the American economy from overheating.

The price of oil CLc1 , one of Canada's major exports, settled 1.9% higher at $65.69 a barrel after more U.S. states eased lockdowns and the European Union sought to attract travelers.

Canada's trade balance shifted back to a deficit of C$1.1 billion in March following two consecutive months of surplus as imports jumped significantly and exports edged up slightly, Statistics Canada said. Analysts had predicted a surplus of C$700 million.

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

Canadian government bond yields were higher across the curve, with the 10-year CA10YT=RR up 1.3 basis points at 1.535%.
Reporting by Fergal Smith; Editing by Andrea Ricci and Peter Cooney

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.