By Fergal Smith
TORONTO (Reuters) – The Canadian dollar strengthened modestly against its U.S. counterpart on Wednesday as oil prices rose and the greenback posted broad-based declines, but the loonie remained within reach of an earlier 12-week low.
The loonie was trading 0.1% higher at 1.39 to the U.S. dollar, or 71.94 U.S. cents, after touching its weakest intraday level since Aug. 5 at 1.3940.
“The U.S. dollar has lost a little bit of edge today,” said Amo Sahota, director at Klarity FX in San Francisco. “We may be finding some pressure on the dollar coming from other currencies.”
The greenback gave back some recent gains against a basket of major currencies including the euro after data showed the euro zone economy growing faster than expected last quarter.
The price of oil, one of Canada’s major exports, rose after data showed U.S. crude and gasoline inventories fell unexpectedly last week. U.S. crude oil futures settled 2.1% higher at $68.61 a barrel.
Canada’s currency has weakened 3.5% since late September. Still, that has not stopped Bank of Canada Governor Tiff Macklem from projecting further interest rate cuts if the economy evolves as the central bank expects.
“He doesn’t look like he’s too concerned about Canadian dollar weakness in recent weeks,” Sahota said.
Macklem and Senior Deputy Governor Carolyn Rogers are due to appear before the Standing Senate Committee on Banking, Commerce and the Economy at 4:20 p.m. ET (2015 GMT).
Canadian government bond yields were mixed across a flatter curve, with the 10-year down roughly half a basis point at 3.240%.
Ontario, Canada’s most populous province and one of the world’s biggest sub-sovereign borrowers, projected a narrower budget deficit of C$6.6 billion for the current fiscal year.
(Reporting by Fergal Smith; Editing by Diane Craft)