Market News

By Fergal Smith

• Canadian dollar gains 0.3% against the greenback
• Touches its weakest since June 18 at 1.3755
• Price of U.S. oil hits a 2-month high
• 10-year yield touches highest since May 31

TORONTO, July 2 (Reuters) - The Canadian dollar rebounded from an earlier two-week low against its U.S. counterpart on Tuesday, helped by dovish comments from Federal Reserve Chair Jerome Powell and the recent move higher in oil prices.
The loonie was trading 0.3% higher at 1.3690 to the U.S. dollar, or 73.05 U.S. cents, after touching its weakest intraday level since June 18 at 1.3755.
"Oil is powering higher, hitting a 2-month high, which should provide some support to the loonie," Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc, said in a note.

The price of oil , one of Canada's major exports, climbed to its highest level since April 26 before pulling back to $83.22 a barrel, down 0.2% on the day, while the U.S. dollar (.DXY) edged lower against a basket of major currencies. 

The greenback weakened as Powell suggested that the U.S. central bank is more than likely to start its easing cycle later this year. Domestic data showed deterioration in manufacturing activity, extending a record-setting run of contraction for the sector. The S&P Global Canada Manufacturing Purchasing Managers' Index (PMI) was unchanged in June, matching the seasonally adjusted 49.3 level that was posted in May.

Canadian government bond yields rose across the curve, catching up with the move in U.S. Treasuries on Monday when the Canadian market was closed for the Canada Day holiday. The 10-year was up 12 basis points at 3.627%, after earlier touching its highest level since May 31 at 3.659%.