CANADA’S FX DEBT – Canadian Dollar Rises as Investors Favor Goods Exporters

(Adds quotes and strategist details throughout, updates pricing) * The Canadian dollar gains 0.4% against the greenback * The loonie hits its highest level since April 2018 at 1.2625 * The U.S. oil prices stand 1.3% higher * Canadian bond yields rise on a steeper curve By Fergal Smith TORONTO, Jan 14 (Reuters) – The Canadian dollar hit a nearly three-year high against its US counterpart on Thursday, supported by rising oil prices and strengthening currencies that are benefiting from growing demand for goods exports. The loonie was trading up 0.4% at 1.2638 against the greenback, or 79.13 cents US. It touched its highest level since April 2018 at 1.2625. Export-focused economies, like those in Asia, “that are asset-intensive tend to see their currencies outperform,” said Mazen Issa, senior FX strategist at TD Securities. “CAD gets trained for the ride.” Analysts expect the deployment of vaccines and a rebound in exports to lead the recovery of trade-dependent Asian economies in 2021. On Wednesday, the Taiwanese dollar hit a 23.5-year high at 27.938. Thursday’s data showed Chinese exports rose more than expected in December. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to global economic prospects. U.S. crude oil futures settled up 1.3% at $53.57 a barrel as bullish signals from Chinese import data offset a surge in coronavirus cases in Europe and new lockdowns in China. Wall Street closed lower as hopes for further fiscal stimulus ahead of US President-elect Joe Biden’s pandemic relief package clashed with a waning labor market. Canadian home sales data for December is due Friday, while the Bank of Canada is due to make an interest rate decision next week. Canadian government bond yields rose on a steeper curve in sympathy with US Treasuries. The 10-year was up 4.8 basis points at 0.857%, after hitting its highest in nearly 10 months at 0.887% on Tuesday. (Reporting by Fergal Smith; editing by Jonathan Oatis)

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