(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar advances 0.5% against greenback
* Canadian GDP increases 3% in July
* Loonie declines 2.1% in September
* Canadian government bond yields rise across steeper curve
By Fergal Smith
TORONTO, Sept 30 (Reuters) – The Canadian dollar
strengthened to a one-week high against the greenback on
Wednesday as hopes of additional U.S. stimulus rose and data
showed the domestic economy extending its recovery, with the
loonie clawing back some of this month’s decline.
The loonie was trading 0.5% higher at 1.3323 to the
greenback, or 75.06 U.S. cents. The currency touched its
strongest intraday level since last Wednesday at 1.3301.
Still, the loonie posted a monthly decline for the first
time since March as rising Canadian coronavirus cases weighed on
investor sentiment. It ended September 2.1% lower.
The big driver for investors was news “that there’s some
progress on the U.S. stimulus bill,” said Amo Sahota, director
at Klarity FX in San Francisco. “Any motion in that direction is
lifting market sentiment up, and that’s beneficial for the
Canada sends about 75% of its exports to the United States,
including oil. U.S. crude futures settled 2.4% higher at
$40.22 a barrel, while shares on Wall Street rose.
U.S. House of Representatives Speaker Nancy Pelosi and U.S.
Treasury Secretary Steven Mnuchin expressed hope for a
breakthrough in partisan stimulus negotiations in Congress.
The Canadian economy expanded by 3% in July from June as
businesses across the country continued to reopen from
coronavirus-related shutdowns, with growth expected to grow at a
pace of 1% in August.
Canada’s economy could suffer a smaller hit from a second
wave of the coronavirus pandemic than earlier this year, as
provinces strive to avoid broad-based lockdowns and take
targeted measures to deal with outbreaks, strategists say.
Canadian government bond yields rose across a steeper curve,
with the 10-year up 3.3 basis points at 0.569%.
(Reporting by Fergal Smith
Editing by Nick Zieminski and Paul Simao)
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Keywords: CANADA FOREX/ (UPDATE 1, PIX)
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