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Canadian dollar turns higher, tracking uptick in risk appetite

10/22/2020 | 03:12pm EST
FILE PHOTO: A Canadian dollar coin, commonly known as the

TORONTO (Reuters) - The Canadian dollar edged higher against its broadly stronger U.S. counterpart on Thursday as Wall Street clung to hopes of a U.S. coronavirus relief package and oil prices climbed, with the loonie reversing its earlier decline.

The Canadian dollar was trading 0.1% higher at 1.3138 to the greenback, or 76.12 U.S. cents, having traded in a range of 1.3123 to 1.3177. Since the start of the month, the loonie has gained 1.4%.

"The Canadian dollar is very much following the broader risk tone again today," said Erik Bregar, Director and Head of FX Strategy at the Exchange Bank of Canada.

The catalyst for the improvement in sentiment is not very clear, but traders have tended to respond positively to comments on stimulus prospects from U.S. House of Representatives Speaker Nancy Pelosi, Bregar said.

Pelosi said negotiators were making progress in talks with the Trump administration for another round of financial aid and that legislation could be hammered out "pretty soon."

Shares on Wall Street gained in choppy trading, as investors cheered the prospect of more stimulus to support a pandemic-damaged U.S. economy, with more data pointing to a slowing labor market recovery.

Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures settled 1.5% higher at $40.64 a barrel, while the U.S. dollar rebounded from seven-week lows against a basket of major currencies.

The Canadian economic recovery from the coronavirus recession will be significantly slower than previously thought, with a high risk a resurgence in cases will halt the rebound underway, according to a Reuters poll of economists.

Canadian government bond yields moved higher across a steeper curve in sympathy with U.S. Treasuries. The 10-year rose 2.4 basis points to 0.643%.

On Wednesday, it touched its highest intraday level in nearly eight weeks at 0.679%.

(Reporting by Fergal Smith; editing by Jonathan Oatis)

By Fergal Smith

© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / CANADIAN DOLLAR (AUD/CAD) 0.05% 0.95503 Delayed Quote.5.02%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) 0.05% 1.73676 Delayed Quote.0.58%
CANADIAN DOLLAR / JAPANESE YEN (CAD/JPY) 0.02% 80.671 Delayed Quote.-4.04%
CANADIAN DOLLAR / SWISS FRANC (CAD/CHF) -0.14% 0.69393 Delayed Quote.-6.15%
NEW ZEALAND DOLLAR / CANADIAN DOLLAR (NZD/CAD) 0.03% 0.91444 Delayed Quote.4.47%
WTI -0.20% 44.06 Delayed Quote.-26.43%
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