C$ posts 7-month high as Wall St rally bolsters sentiment

TORONTO: The Canadian dollar climbed to its strongest level in nearly seven months against its U.S. counterpart on Wednesday after a record run for stocks on Wall Street, with domestic data showing lower inflation doing little to halt the currency's momentum.

Stocks globally edged up as a record high for U.S. stocks outweighed simmering worries over a resurgence in coronavirus cases that could undermine a nascent recovery.

Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

U.S. crude prices were down 0.8pc at $42.53 a barrel on concerns U.S. fuel demand will face a slow recovery amid stalled talks on an economic stimulus package.

The Canadian dollar strengthened 0.2pc to 1.3137 to the greenback, or 76.12 U.S. cents.

It notched its strongest intraday level since Jan. 24 at 1.3133, helped by recent pressure on the U.S. dollar.

Canada's annual inflation rate in July fell to 0.1pc, Statistics Canada said.

That was less than the 0.5pc rate that analysts had expected, while the average of the Bank of Canada's core measures dipped to 1.6pc from 1.7pc.

Separate data from Statistics Canada showed that Canadian wholesale trade increased by a record 18.5pc in June from May as large parts of the economy reopened following closures related to the coronavirus pandemic. Analysts had forecast a 10.0pc increase.

Canadian government bond yields were mixed across a flatter curve, with the 10-year dipping less than half of a basis point to 0.561pc.

Canadian Prime Minister Justin Trudeau is weighing sweeping changes to the country's social welfare system and a series of economic measures that will align Canada with ambitious climate goals, according to people familiar with the matter.