Canadian dollar tracks Wall Street zest to post biggest weekly gain since June

Toronto

THE Canadian dollar strengthened to a two-month high against its US counterpart on Friday, as equity markets held on to the week's sharp gains and domestic data showed that the economy added further jobs in October.

The loonie was trading 0.1 per cent higher at 1.3030 to the greenback, or 76.75 US cents, having notched its strongest intraday level since Sept 1 at 1.3019. The currency was up 2.2 per cent for the week, its biggest advance since June.

Wall Street steadied late in the week as Democratic challenger Joe Biden edged closer to victory in the US presidential election before he crossed the 270 electoral votes needed to win after taking Pennsylvania during the weekend.

Investors have been betting that a potentially split Congress would reduce the risk of tighter regulations on US companies and that the Federal Reserve will keep its loose monetary policy intact.

"The Canadian dollar is still very much positively correlated with risk sentiment," said Erik Bregar, head of FX strategy at Exchange Bank of Canada. "If stocks keep going higher ... it is going to make the Canadian dollar go higher."

The US dollar fell against a basket of major currencies, while US crude oil futures settled 4.3 per cent lower at US$37.14 a barrel. New lockdowns in Europe to halt surging Covid-19 infections threatened to reduce demand for oil, one of Canada's major exports.

Statistics Canada reported 83,600 new jobs in October. That was fewer than expected as Covid-19-related shutdowns started to bite, but analysts said the gain reflected welcome signs of resilience in the economy.

Canadian economic activity expanded at a faster-than-expected pace in October. The Ivey Purchasing Managers Index rose to 54.5 in October from 54.3 in September.

Investors also digested US jobs data, which showed that employers hired the fewest workers in five months.

Canadian government bond yields were higher across a steeper curve in sympathy with US Treasuries. The 10-year rose 3.5 basis points to 0.649 per cent. REUTERS