C$ steadies, held back by profit taking after recent rally

TORONTO: The Canadian dollar steadied against its broadly weaker US counterpart on Wednesday, as fading prospects of US stimulus weighed on investor sentiment and investors took some profits after the currency notched a five-week high the previous day.

The loonie was trading nearly unchanged at 1.3140 to the greenback, or 76.10 US cents, having traded in a range of 1.3116 to 1.3163. On Tuesday, the currency touched its strongest intraday level since Sept. 8 at 1.3095.

"Some of today's weakness may reflect profit taking from recent longs," said Erik Nelson, a currency strategist at Wells Fargo in New York. "CAD remains well positioned in our view over the longer term."

The price of oil, one of Canada's major exports, settled 2.1% higher at $41.04 a barrel but Wall Street dropped as US Treasury Secretary Steven Mnuchin said that a stimulus deal would not likely be made before the presidential election in November.

Canada sends about 75% of its exports to the United States.

The US dollar retreated against a basket of major currencies, a day after notching its biggest daily percentage gain in three weeks, while Canadian government bond yields eased, with the 10-year down about half a basis point at 0.583%. The COVID-19 pandemic is accelerating the public's use of online services and that means the Bank of Canada must move more quickly to research how a central bank digital product would work, Deputy Governor Tim Lane said.