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
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