TORONTO: The Canadian dollar edged higher against its broadly stronger US counterpart on Tuesday as oil prices rebounded, while political upheaval in the UK dominated trading in the foreign exchange market.
British lawmakers defeated Prime Minister Theresa May's Brexit divorce deal by a crushing margin, raising the prospect of a disorderly exit from the European Union or even to a reversal of the 2016 decision to leave.
"This is potentially the most clear and present shock in the FX system right now," said Bipan Rai, executive director and North America head, FX Strategy at CIBC Capital Markets. "If it's risk-off, the loonie will get hit."
Canada exports many commodities, including oil, so its economy could be hurt if political uncertainty reduces prospects for global growth.
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