Loonie Edges Higher as Trade Tensions Ease, Surplus Data Boosts CAD

The Canadian dollar rebounded slightly on Thursday after data showed Canada's current account balance swung to a surprise surplus in the second quarter. The currency was trading 0.2% higher at 1.3855 per US dollar, or 72.18 US cents. This comes after oil prices rose and as investors waited for new US tariffs on Canadian goods to take effect.

Tony Valente, a senior FX dealer at AscendantFX, said the CAD has held up relatively well despite renewed escalation in trade tensions. However, risks remain tilted to the downside, he noted. The market is not yet pricing in a worst-case outcome, and any meaningful de-escalation in trade tensions could quickly bring buyers back.

The current account balance swung to a surplus of C$8.84 billion (US$6.37 billion) in the second quarter from a first-quarter deficit of C$8.31 billion. The gain was led by strong gains in goods exports, including energy products. Economists had forecast a deficit of C$2 billion.