* Canadian dollar gains 0.4% against the greenback
* Canadian manufacturing sales rise 10.7% in May
* Price of U.S. oil increases 1.6%
* Canada's 10-year
By Fergal Smith
TORONTO, July 15 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as investors grew more optimistic about a coronavirus vaccine and domestic data showed a rebound in factory sales, with the currency recovering from a two-week low the day before.
Canadian manufacturing sales increased 10.7% in May following a record 27.9% decline in April, Statistics Canada said, as many manufacturers resumed operations following COVID-19-related shutdowns.
World shares climbed towards a four-month high
after U.S. researchers reported that Moderna Inc's
Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude
The Canadian dollar
The Bank of Canada is due to make an interest rate announcement at 10 a.m. (1400 GMT). The central bank is expected to leave its benchmark interest rate on hold at 0.25%, with investors likely to focus on the bank's outlook for the economy and potential guidance on its bond-buying program.
"We'll be watching for any discussion of how the BoC might adjust its purchase program in reaction to last week's deficit and issuance explosion in the federal fiscal snapshot," Benjamin Reitzes, Canadian rates & macro strategist at BMO Capital Markets, said in a note.
Canada's budget deficit is forecast to hit C$343.2 billion in the current fiscal year.
Canada's 10-year
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