TORONTO, June 10 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday, but the move was limited as the Bank of Canada took a wait-and-see approach on interest rates and investors weighed uncertain prospects for a continental trade pact.
The loonie was trading 0.2% higher at 1.3925 per U.S. dollar, or 71.81 U.S. cents, after moving in a range of 1.3900 to 1.3957. On Tuesday, the currency touched a six-month low at 1.3969.
The BoC left its benchmark interest rate unchanged at 2.25% for a fifth straight time and said it was seeing limited evidence that higher energy prices were fueling broad-based inflation.
Investors were pricing in 32 basis points of rate hikes by December, down from 37 basis points before the policy decision, swap market data showed.
"The (economic) data in Canada has not been stellar ... and that puts the Bank of Canada in a fairly good position in that they can wait to see what happens," said Darcy Briggs, a portfolio manager at Franklin Templeton Canada.
Recent first-quarter GDP data showed that Canada's economy slipped into a technical recession in the first quarter.
"Canada is still dealing with a trio of shocks," Briggs said, pointing to higher energy prices, the resetting of many mortgages at sharply higher interest rates and trade uncertainty.
U.S. President Donald Trump said on Wednesday he might not renew his country's free trade deal with Canada and Mexico.
The global benchmark price of oil, one of Canada's major exports, was trading about 2.5% higher at $93.78 a barrel following tit-for-tat strikes between the U.S. and Iran.
Canadian bond yields were mixed across the curve, with the 10-year barely changed at 3.487%.
Reporting by Fergal Smith; Editing by Paul Simao
