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Canadian dollar unwinds gains as U.S. Fed dampens hope of large rate cut

Published 2019-06-25, 03:30 p/m
© Reuters.  Canadian dollar unwinds gains as U.S. Fed dampens hope of large rate cut
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* Canadian dollar trades near flat against the greenback

* Canadian wholesale trade rises 1.7% in April

* Price of U.S. oil decreases 0.1%

* Canadian bond prices rise across a flatter yield curve

By Fergal Smith

TORONTO, June 25 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Tuesday, giving up its earlier gains, as less dovish than anticipated comments from a U.S. Federal Reserve policymaker offset strong domestic wholesale trade data.

Canadian wholesale trade increased by 1.7% in April from March on stronger sales in the motor vehicle and motor vehicle parts and accessories subsector, Statistics Canada said. Analysts had forecast a 0.2% increase. greater-than-expected gain could boost prospects for April gross domestic product data, which is due for release on Friday.

"We did get a pretty nice wholesale trade number this morning," said Eric Theoret, a currency strategist at Scotiabank "It gave the CAD a bit of a lift but generally it has been more of a big U.S. dollar story today rather than anything CAD specific."

The U.S. dollar .DXY climbed against a basket of major currencies after St. Louis Federal Reserve President James Bullard said he does not see the need for a half-point interest rate cut at next month's Federal Open Market Committee meeting. fact that the most dovish member of the FOMC, the one who dissented at the last meeting, didn't endorse a 50 basis point cut was a surprise for the market," Theoret said.

Investors have been betting on much more easing from the Fed over the coming months than from the Bank of Canada. BOCWATCH

At 3:06 p.m. (1906 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3178 to the greenback, or 75.88 U.S. cents. The currency, which on Thursday touched its strongest intraday level since March 1 at 1.3151, traded in a range of 1.3153 to 1.3208.

The price of oil, one of Canada's major exports, dipped on concerns that U.S.-China trade tensions could weigh on fuel demand. U.S. crude oil futures CLc1 settled 0.1% lower at $57.83 a barrel. government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year CA2YT=RR rose 1.5 Canadian cents to yield 1.397% and the 10-year CA10YT=RR gained 22 Canadian cents to yield 1.438%.

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