Canadian Dollar Gains On Stimulus Hopes But Sticks To Recent Holding Pattern

The Canadian dollar rose against the greenback on Thursday as the prospect of renewed U.S. economic stimulus talks bolstered investor sentiment, but gains were capped by the surge in global COVID-19 cases, with the currency sticking to this week’s range.

The Canadian dollar was trading 0.2% higher at 1.3061 to the greenback, or 76.56 U.S. cents. The currency traded in a range of 1.3059 to 1.3123, within the narrow 1.3030 to 1.3141 band seen since the start of the week.

The holding pattern for the currency “mirrors the struggle between record COVID-19 infections rates and renewed lockdown measures versus the positive vaccine developments,” said Tony Valente, a senior FX dealer at AscendantFX.

“I sense that we will stay in this range until next week’s month-end rebalancing and (U.S.) Thanksgiving holiday,” Valente said.

Wall Street rose after top U.S. Senate Democrat Chuck Schumer was reported saying that Republican Majority Leader Mitch McConnell had agreed to resume COVID-19 relief talks as cases surge across the country.

Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures settled 0.2% lower at $41.74 a barrel as the surge in new infections raised concerns about the outlook for oil demand.

Britain and Canada are very close to agreeing on the terms of a free trade deal and the agreement could be announced in the coming days, a Canadian government source said.

Canadian employment declined by 79,500 in October, a report from payroll services provider ADP showed. Canada’s retail sales report for September is due on Friday.

Canadian government bond yields eased across a flatter curve in sympathy with U.S. Treasuries. The 10-year yield fell 2.2 basis points to 0.685%, extending its pullback from a seven-month high last Friday at 0.813%.

– Reuters