CANADA’S FX DEBT – Canadian Dollar Trims Gains as Oil Prices Fall

(Adds activity details; updates prices)

* The Canadian dollar strengthens 0.1% against the greenback

* Reached its highest level since November 10 at 1.2453

* US oil price drops 0.6%

* Canadian bond yields trade on a flatter curve

By Fergal Smith

TORONTO, Jan 13 (Reuters) – The Canadian dollar strengthened to a two-month high against its U.S. counterpart on Thursday, but lost much of its gains as oil prices fell and a decline in tech stocks weighed on Wall Street.

the loon was trading up 0.1% at 1.2500 per greenback, or 80.00 US cents, after hitting its highest level since Nov. 10 at 1.2453.

The currency “benefits from broader dollar weakness,” Scotiabank strategists including Shaun Osborne said in a note.

Adding to loonie support, markets are “not ruling out” a Bank of Canada interest rate hike later this month, strategists said.

Canada’s central bank is due to make a policy announcement and update its economic forecast on January 26. It has not raised rates since October 2018.

The U.S. dollar extended its slide against a basket of currencies a day after data showing an expected surge in U.S. consumer prices in December failed to give further impetus to the Federal Reserve’s policy normalization efforts .

U.S. stocks and the price of oil, one of Canada’s top exports, fell as investors took profits after two days of gains. U.S. crude oil futures settled down 0.6% to $82.12 a barrel.

COVID-19 vaccine requirements for foreign truckers at the Canada-U.S. border could further disrupt the supply chain if the two countries do not decide to allow exemptions, says the head of the Canadian Alliance of the trucking.

Canadian government bond yields fell on a flatter curve, 10-year bonds down 3.9 basis points to 1.698%. On Monday, it hit its highest level in more than six weeks at 1.753%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Nick Zieminski) ((fergal.smith@thomsonreuters.com; +1 647 480 7446;)) Keywords: CANADA FOREX/ (UPDATE 1)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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Felix J. Dixon