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CANADA FX DEBT-Canadian dollar rises to 2-week high as stock markets rally

    * Canadian dollar rises 0.3% against the greenback
    * Loonie notches its strongest since Sept. 21 at 1.3263
    * Price of U.S. oil increases 4.7%
    * Canadian bond yields climb across a steeper curve

    TORONTO, Oct 5 (Reuters) - The Canadian dollar strengthened
to a two-week high against its U.S. counterpart on Monday,
tracking improvement in risk appetite ahead of domestic data
later in the week that could help guide expectations about the
strength of economic recovery.
    Global shares          and the price of oil, one of Canada's
major exports, rose as suggestions U.S. President Donald Trump's
health was improving brought relief to markets and after U.S.
House Speaker Nancy Pelosi said progress was being made on
additional fiscal stimulus.                         
    U.S. crude oil futures        climbed 4.7% to $38.78 a
barrel, while the Canadian dollar        was trading 0.3% higher
at 1.3268 to the greenback, or 75.37 U.S. cents. The currency
touched its strongest intraday level since Sept. 21 at 1.3263.
    Canada's trade report for August is due on Tuesday, while
Bank of Canada Governor Tiff Macklem is scheduled to speak on
Thursday and the September employment report is due on Friday.
    The Canadian dollar is set to gain ground against its U.S.
counterpart as an expected recovery in the global economy from
the coronavirus crisis improves the outlook for commodity
prices, a Reuters poll showed.             
    Still, speculators have raised their bearish bets on the
Canadian dollar to the highest in four weeks, data from the U.S.
Commodity Futures Trading Commission showed on Friday. As of
Sept. 29, net short positions had increased to 18,948 contracts
from 18,882 in the prior week.    
    Canadian government bond yields were higher across a steeper
curve in sympathy with U.S. Treasuries on Monday. The 10-year
            rose 1.6 basis points to 0.584%, while the gap
between it and its U.S. equivalent widened by 1.7 basis points
to a spread of 14.3 basis points in favor of the U.S. note.
    That was the widest spread since June 25.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  
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