TORONTO (Reuters) – The Canadian dollar weakened against its U.S. counterpart on Tuesday, giving back some of the previous day’s sharp gains, as oil prices fell and data showed a surprise trade deficit.
Canada posted a trade deficit of C$137 million in December, as imports rose and exports fell from November, Statistics Canada said. Analysts had forecast a surplus of C$2.50 billion.
The price of oil, one of Canada’s major exports, slipped ahead of the resumption of indirect talks between the United States and Iran, which could revive an international nuclear agreement and allow more oil exports from the OPEC producer.
U.S. crude prices fell 1.3% to $90.12 a barrel, while the Canadian dollar was trading 0.3% lower at 1.2703 to the greenback, or 78.72 U.S. cents.
It traded in a range of 1.2665 to 1.2717. On Monday, it climbed 0.8%, its biggest gain in nearly four weeks.
The U.S. dollar rallied against a basket of major currencies as European Central Bank President Christine Lagarde tried to rein in interest rate hike expectations that had lifted the euro.
Angry Canadian truckers were blocking the busiest crossing with the United States as Prime Minister Justin Trudeau prepared to face legislators later in the day to discuss the growing crisis.
BoC Governor Tiff Macklem is due to speak on Wednesday on the evolution of Canadian business, which could offer clues on the outlook for interest rates. Money markets expect the central bank to hike next month for the first time since October 2018.
Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries.
The 10-year was up 3.8 basis points at 1.876%, in reach of last month’s peak at 1.905%, which was its highest in nearly three years.
(Reporting by Fergal Smith; editing by Jason Neely)
