July 29, 2020 / 7:46 PM / 8 days ago

CANADA FX DEBT-C$ gains as investors sell greenbacks on 'downbeat' Fed

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar rises 0.2% against the greenback
    * Loonie trades in a range of 1.3333 to 1.3387
    * Price of U.S. oil increases 0.6%
    * Canadian bond yields move higher across the curve

    By Fergal Smith
    TORONTO, July 29 (Reuters) - The Canadian dollar rose
against its U.S. counterpart on Wednesday as the Federal
Reserve's dovish stance weighed broadly on the greenback and the
Ontario government paved the way for most businesses in Canada's
most populous city to reopen.    
    The U.S. dollar fell to a two-year low as the Fed repeated a
pledge to use its "full range of tools" to support the economy
for as long as it takes to recover from fallout of the COVID-19
pandemic.             
    "The market's immediate response to a downbeat and cautious
Federal Reserve policy announcement was to continue selling U.S.
dollars versus major currencies," said Michael Goshko, corporate
risk manager at Western Union Business Solutions.
    Higher prices for oil, one of Canada's major exports, added
to support for the loonie. U.S. crude oil futures        settled
up 0.6% at $41.27 a barrel after a steep drop in U.S. crude
inventories, but another record day for coronavirus cases
worldwide kept gains in check.                    
    The Canadian dollar        was trading 0.2% higher at 1.3344
to the U.S. dollar, or 74.94 U.S. cents. The currency, which on
Tuesday touched its strongest intraday level in nearly seven
weeks at 1.3327, traded in a range of 1.3333 to 1.3387.
    Toronto will move into the third stage of its economic
reopening on Friday, the Ontario provincial government
announced, after a four-month lockdown.               
    Canada's GDP report for May is due on Friday. It is expected
to show some recovery in the economy after a sharp contraction
in April.
    Canadian government bond yields were higher across the curve
on Wednesday, with the 10-year             up more than one
basis point at 0.489%. On Tuesday, it hit its lowest intraday
level since June 15 at 0.472%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and Tom
Brown)
  
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