TORONTO (Reuters) - The Canadian dollar weakened slightly against the greenback on Wednesday, pulling back from an earlier five-day high as investors awaited GDP data that could guide expectations for the Bank of Canada’s interest rate outlook.
Canada’s third quarter gross domestic product data is due on Friday. Economists expect the economy has slowed after expanding by 3.7% annualized in the second quarter.
“I think we are in a hiatus move (for the loonie) until we get the GDP data,” said Amo Sahota, director at Klarity FX in San Francisco. “That is going to be the key driver, otherwise I think it is still trading risk-on, risk-off with the U.S.-China trade agreement focus.”
Wall Street’s main indexes closed at record levels for a third straight day in a muted volume session ahead of the Thanksgiving holiday, as fresh data pointed to an economy on solid footing. Investors remained cautiously optimistic about a resolution to trade tensions between the United States and China.
The Bank of Canada, which will make a policy decision next week, has expressed concern about the impact of trade conflicts on Canada’s commodity-linked economy.
The central bank is now expected to leave rates on hold through to the end of next year, according to a slim majority of economists in a Reuters poll.
At 4:27 p.m. (2127 GMT), the Canadian dollar CAD=D4 was trading 0.1% lower at 1.3280 to the greenback, or 75.30 U.S. cents. Earlier in the session, the currency touched its strongest level since Nov. 22 at 1.3261.
The five-day high for the loonie came as operations resumed at Canada's largest railway, Canadian National Railway Co CNR.TO, a day after the company and union officials reached a tentative deal to end an eight-day-long strike that triggered a severe propane shortage and left many Canadian exports stranded.
The price of oil, one of Canada's major exports, fell as an industry report showed a surprise boost in U.S. crude inventories. U.S. crude oil futures CLc1 were down 0.5% at $58.11 a barrel.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries after data showed that new orders for key U.S.-made capital goods increased by the most in nine months in October.
The 10-year CA10YT=RR fell 30 Canadian cents to yield 1.474%.
Reporting by Fergal Smith; editing by Jonathan Oatis and Tom Brown
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