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CANADA FX DEBT-C$ retreats from 2-week high amid potential for U.S. policy gridlock

    * Canadian dollar falls 0.3% against the greenback
    * Canada posts a trade deficit of C$3.3 billion in September
    * Price of U.S. oil increases 2.3%
    * Canadian bond yields ease across a flatter curve

    TORONTO, Nov 4 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Wednesday after a tight U.S.
election that could reduce prospects of a large economic
stimulus package, with the currency pulling back from an earlier
two-week high.
    The U.S. bond market moved to price a greater chance of U.S.
policy gridlock, sensing that Democrats may not have enough
support in the Senate to push through the large coronavirus
relief package that some investors had hoped for, while the
White House race remained in the balance.             
    A large economic package would bolster prospects for
Canada's commodity-linked currency, FX strategists said in a
Reuters poll.             
    The Canadian dollar        was trading 0.3% lower at 1.3174
to the greenback, or 75.91 U.S. cents. Earlier, the currency
touched its strongest level since Oct. 21 at 1.3095.
    Canada posted a trade deficit of C$3.3 billion in September
as both exports and imports increased, Statistics Canada said.
Canada's jobs report for October is due on Friday.
    U.S. crude        prices were up 2.3% at $38.51 a barrel.
Oil is one of Canada's major exports.    
    Canadian government bond yields were lower across a flatter
curve in sympathy with U.S. Treasuries. The 10-year            
fell 6.8 basis points to 0.623%, pulling back from Tuesday's
two-month intraday high at 0.694%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)
  
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