Market News

CAD gains as investors cheer U.S. debt ceiling deal - REUTERS

MAY 30, 2023

  • Canadian dollar strengthens 0.2% against the greenback
  • Trades in a range of 1.3584 to 1.3618
  • Oil rises 0.3%
  • 2-year yield touches a near three-month high

TORONTO, May 29 (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Monday, clawing back some recent declines, as a deal to temporarily suspend the U.S. debt ceiling boosted investor sentiment.

The loonie was trading 0.2% higher at 1.3584 to the greenback, or 73.62 U.S. cents, after moving in a range of 1.3584 to 1.3618. It touched on Friday its weakest intraday level since April 28 at 1.3654.

"The Canadian dollar has been able to extend its bounce from Friday thanks to a constructive risk mood following this past weekend's U.S. debt ceiling deal," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.

Democratic President Joe Biden and Republican House of Representatives Speaker Kevin McCarthy on Sunday signed off on the deal which could help prevent the U.S. defaulting on its debt.

The U.S. stock market was closed for Memorial Day but stock index futures and the price of oil, one of Canada's major exports, moved higher. U.S. crude prices were up 0.3% at $72.87 a barrel.

Canadian GDP data is due for release on Wednesday. It is expected to show that the economy grew at an annualized rate of 2.5% in the first quarter.

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The data could help guide expectations for next week's interest rate decision by the Bank of Canada. Money markets see a roughly 30% chance of the central bank hiking its benchmark rate for the first time since January.

Canadian government bond yields were mixed across a flatter curve.

The 2-year touched its highest level since March 8 at 4.352% before dipping slightly to 4.335%, up 2.9 basis points on the day, while the 10-year was down 1.1 basis points at 3.322%.

Reporting by Fergal Smith; Editing by Andrea Ricci


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