Canadian dollar firms as investors eye U.S. stimulus progress

TORONTO: The Canadian dollar edged higher against its U.S. counterpart on Tuesday as progress toward U.S. coronavirus relief aid buoyed investor sentiment and domestic data showed housing starts jumping in November.

U.S. stock index futures rose as Democratic and Republican leaders appeared more upbeat about including a fresh round of coronavirus aid in a bill to avert a government shutdown.

Canada sends about 75pc of its exports to the United States, including oil. U.S. crude prices were up 0.9pc at $47.40 a barrel as optimism from the rollout of coronavirus vaccines balanced out tighter lockdowns in Europe and forecasts of a slower demand recovery.

Canada kicked off its inoculation campaign on Monday by injecting frontline healthcare workers and elderly nursing home residents, becoming just the third nation in the world to administer the Pfizer/BioNTech vaccine.

The Canadian dollar was trading 0.1pc higher at 1.2741 to the greenback, or 78.49 U.S. cents, having traded in a range of 1.2736 to 1.2771.

Last Thursday, the currency touched its strongest level in more than 2-1/2 years at 1.2702.

Canadian housing starts rose 14.4pc in November compared with the previous month, beating analyst expectations, data from the national housing agency showed.

Separate data from Statistics Canada showed that factory sales rose by 0.3pc in October from September.

"The housing sector remains a top performer of the pandemic economy while activity in the factory sector remains uneven," said Ryan Brecht, a senior economist at Action Economics.

Bank of Canada Governor Tiff Macklem is due to give a speech to the Vancouver Board of Trade on the Canadian and global economies. His prepared remarks are set for release at 2:30 p.m. ET (1930 GMT).

Canadian government bond yields were higher across the curve in sympathy with U.S. Treasuries.

The 10-year rose 1 basis point to 0.724pc.