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CANADA FX DEBT-Canadian dollar slips as seasonal trade shifts in favor of greenback

05/04/2021 | 03:58pm EDT
FILE PHOTO: A Canadian dollar coin, commonly known as the

 (Adds strategist quotes and details throughout; updates prices)
    * 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        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        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       , 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
    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             up 1.3 basis points at

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Peter

ę Reuters 2021
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