Canadian dollar steadies as US stimulus uncertainty offsets Chinese data

TORONTO: The Canadian dollar was little changed against its broadly weaker US counterpart on Monday, giving back earlier gains, as an uncertain outlook for US stimulus countered encouraging economic data from China.

Data showed China's economic rebound from the coronavirus pandemic accelerated in the third quarter.

China's data is pointing to "reasonably strong global demand," which is good news for a commodity-exporting country like Canada, said Amo Sahota, director at Klarity FX in San Francisco.

Domestic data showed that wholesale trade rose 0.3% in August from July, remaining above pre-COVID-19 levels.

Business sentiment improved across Canada as COVID-19 restrictions were eased, a Bank of Canada survey showed, but sentiment remains weak.

Wall Street's main indexes slipped as investors worried that they might not see a coronavirus economic stimulus deal before the Nov. 3 presidential election, while US crude oil futures settled 0.1% lower at $40.83 a barrel. Oil is one of Canada's major exports.

The Canadian dollar was trading nearly unchanged at 1.3184 to the greenback, or 75.85 US cents, having traded in a range of 1.3150 to 1.3194. It has gained 1% this month.

Investors are raising their outlook for the loonie through year-end, with some seeing "a return to a weaker U.S. dollar," Sahota said.

The greenback lost ground against a basket of major currencies on Monday, as sterling and the euro climbed.

Speculators have cut their bearish bets on the loonie to the lowest since July, data from the US Commodity Futures Trading Commission showed on Friday.

Canadian government bond yields were mixed on Monday, with the 10-year up less than a basis point at 0.586%.

The United States' land borders between Canada and Mexico will remain closed to all non-essential travel until Nov. 21, the US Homeland Security Department said.