Market News

Canadian dollar rises; virus variant 'unease' caps gains - REUTERS

NOVEMBER 30, 2021

By Fergal Smith

  • Summary

  • Canadian dollar strengthens 0.2% against the greenback
  • Canada posts third straight current account surplus
  • Price of U.S. oil increases 3.7%
  • Canadian bond yields rise across the curve

TORONTO, Nov 29 (Reuters) - The Canadian dollar edged higher against the greenback on Monday but held near a two-month low, as a rebound in oil prices lost some momentum and investors weighed the potential economic impact of the Omicron coronavirus variant.

The loonie was trading 0.2% higher at 1.2760 to the greenback, or 78.37 U.S. cents, after trading in a range of 1.2720 to 1.2793. On Friday, it touched its weakest intraday level in more than two months, at 1.2799.

"There seems to still be a fair bit of unease out there regarding the Omicron variant, which is keeping high-beta currencies such as the Canadian dollar on the back foot," said Erik Nelson, a currency strategist at Wells Fargo in New York.

Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to prospects for the global economy.

U.S. crude oil futures were up 3.7% at $70.66 a barrel, but pulling back from a session high of $72.93. On Friday, oil plunged more than 13%.

Quebec has discovered its first case of the COVID-19 Omicron variant, the Canadian province's health minister said, bringing Canada's total number of cases to three.

Canada posted a current account surplus of C$1.4 billion in the third quarter, the third straight quarterly surplus, data from Statistics Canada showed. Analysts had forecast a surplus of C$4.80 billion.

Canadian third-quarter GDP data is due on Tuesday. It is expected to show growth in the economy after a surprise contraction in the second quarter and could help guide expectations for the Bank of Canada policy outlook.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year rose 3.6 basis points to 1.641%, taking back some of Friday's sharp drop.

Reporting by Fergal Smith; Editing by Andrea Ricci and Leslie Adler


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