Canadian dollar steadies as U.S. data helps calm investor nerves

Fergal Smith
·2-min read
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart as stronger-than-expected U.S. data offset worries about rising coronavirus infections, with the currency rebounding from an earlier four-week low.

The Canadian dollar <CAD=> was trading nearly unchanged at 1.3315 to the greenback, or 75.10 U.S. cents. The currency touched its weakest intraday level since Sept. 30 at 1.3389.

The U.S. data "may have given the loonie some reason to rally off its lows from earlier this morning," said Michael Goshko, corporate risk manager at Western Union Business Solutions.

Data showed the U.S. economy grew at a record pace in the third quarter and that weekly unemployment claims fell last week, helping Wall Street rebound after a more than 3% slide a day earlier. Canada sends about 75% of its exports to the United States, including oil.

U.S. crude oil futures <CLc1> settled 3.3% lower at $36.17 a barrel on the potential impact renewed coronavirus lockdowns will have on crude demand, while the safe-haven U.S. dollar <.DXY> climbed against a basket of major currencies.

It was helped by pressure on the euro <EUR=> after the European Central Bank president flagged further monetary easing in December.

Bank of Canada Governor Tiff Macklem sees the benefit of sticking with increased government spending to support an economy that has been hammered by the COVID-19 crisis, even as the central bank keeps some of its own firepower in reserve.

Canada's GDP data for August is due on Friday. Analysts expect the economy to have expanded by 0.9% from July.

Canadian government bond yields rose across a steeper curve in sympathy with U.S. Treasuries. The 10-year <CA10YT=RR> was up 4.3 basis points at 0.639%.

(Reporting by Fergal Smith; Editing by Jonathan Oatis and Hugh Lawson)