April 28, 2020 / 8:04 PM / a month ago

CANADA FX DEBT-Canadian dollar climbs to 2-week high on improving risk appetite

 (Adds dealer quotes and details throughout, updates prices)
    * Canadian dollar rises 0.4% against the greenback
    * Loonie touches its strongest level since April 15 at
1.3936
    * Price of U.S. oil decreases 1.1%
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, April 28 (Reuters) - The Canadian dollar
strengthened to a near two-week high against its U.S.
counterpart on Tuesday as the prospect of looser
social-distancing restrictions in a number of major economies
supported risk appetite.
    World stocks          rose, riding out sharp swings on Wall
Street as experts issued new warnings against reopening
economies too soon.             
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the loonie tends to
be sensitive to the global flow of trade and capital.
    "I think the overall theme that's driving the Canadian
dollar is risk sentiment," said Rahim Madhavji, president at
KnightsbridgeFX.com. "The loonie is rising despite the headwinds
that we are going to see in Canada with low oil, the economy not
opening up as quickly as the United States."
    Prime Minister Justin Trudeau said Ottawa and the provinces
would soon release guidelines on returning to normal, stressing
there had to be enough capacity to test and trace the
coronavirus to control any new spread.             
    The Canadian dollar          was trading 0.4% higher at
1.3977 to the greenback, or 71.55 U.S. cents. The currency
touched its strongest intraday level since April 15 at 1.3936.
    The Canadian economy is likely in its deepest recession on
record and will only recover modestly over the coming year as it
takes a direct hit from the coronavirus outbreak and a collapse
in oil prices, a Reuters poll of economists showed.             
    To cushion the economic impact of the outbreak, Ottawa is
rolling out more than C$100 billion in direct aid and the Bank
of Canada has slashed interest rates to near zero and begun
buying government debt.
    The next governor of the Bank of Canada has room to make an
immediate impact on monetary policy, economists say, as the
central bank's response to the coronavirus crisis likely shifts
from financial market support to boosting economic recovery.
            
    U.S. crude oil futures        were down 1.1% at 12.64 a
barrel as domestic stockpiles were expected to have risen closer
to record highs amid tightening storage despite plans to cut
production during the COVID-19 pandemic.             
    Canadian government bond yields fell across a flatter curve.
The 10-year yield             was down 4.8 basis points at
0.572%.

 (Reporting by Fergal Smith; Editing by Alistair Bell and Peter
Cooney)
  
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