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Canadian dollar firms as trade pact supports investor sentiment


TORONTO — The Canadian dollar edged higher

against its U.S. counterpart on Wednesday as the signing of a

Phase 1 trade agreement between the United States and China

helped underpin investor risk appetite.

Key world stock market indexes climbed to new records on

hopes that the deal would reduce trade tensions.

“It’s a risk-on event for the market and the loonie is

obviously benefiting as a result of it,” said Rahim Madhavji,

president at

Canada runs a current account deficit and is a major

exporter of commodities, including oil, so its economy could

benefit from a pickup in the global flow of trade and capital.

At 3:46 p.m. (2046 GMT), the Canadian dollar was

trading 0.1% higher at 1.3047 to the greenback, or 76.65 U.S.

cents. The currency, which last Thursday hit a near two-week low

at 1.3104, traded in a range of 1.3035 to 1.3078.

The potential lessening of trade tensions comes ahead of an

interest rate decision next week from the Bank of Canada.

“It’s another reason to keep the steady (interest rate)

profile that has been going on for the foreseeable future, till

more data comes in,” Madhavji said.

The central bank has kept its benchmark interest rate on

hold at 1.75% since October 2018 despite easing from some major

global peers, such as the Federal Reserve and the European

Central Bank.

Canadian home sales fell 0.9% in December from the previous

month, breaking a streak of monthly gains that began last March,

the Canadian Real Estate Association said.

U.S. crude oil futures settled 0.7% lower at $57.81 a

barrel, pressured by data showing big increases in U.S. refined


Canadian government bond prices were higher across a flatter

yield curve in sympathy with U.S. Treasuries. The two-year

rose 5 Canadian cents to yield 1.639% and the 10-year

was up 45 Canadian cents to yield 1.536%.

Canada issued a $3 billion five-year global bond to add to

its foreign exchange reserves. The bond was issued at 6 basis

points above the yield on the equivalent maturity U.S. Treasury

note, which was the best pricing ever for a Canadian five-year

global bond, according to the Department of Finance.

(Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter


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