Canadian dollar sticks near 2-1/2-year high as greenback sinks

TORONTO: The Canadian dollar edged higher against its US counterpart on Thursday as rising risk appetite broadly weighed on the greenback, with the loonie staying in reach of a 2-1/2-year high it touched earlier this week.

The loonie strengthened 0.1% to 1.2723 per greenback, or 78.60 US cents, having traded in a range of 1.2688 to 1.2750. On Tuesday, the loonie touched its strongest since April 2018 at 1.2684.

"The Canadian dollar continues to hold near multi-year highs as the dynamic of broad US dollar weakness persists in markets," said Simon Harvey, FX market analyst for Monex Europe and Monex Canada.

The safe-haven greenback fell to its lowest in more than two years against a basket of major currencies as US lawmakers wrangled over stimulus details, the Federal Reserve stuck to its current policy guns, and a post-Brexit trade deal boosted appetite for risk.

The price of oil, one of Canada's major exports, was bolstered by US stimulus prospects, as well as record-breaking refining demand in China and India. US crude oil futures settled 1.1% higher at $48.36 a barrel.

The loonie might have made further progress but for an order to buy US dollars, Ronald Simpson, managing director, global currency analysis, at Action Economics, said in a note.

"Talk of domestic name buying into the 1.2700 level has been heard, and will have to run its course before further downside momentum picks up," Simpson said.

Canadian home prices rose 0.9% in November from October, the Teranet-National Bank Composite House Price Index showed. It was the strongest gain for the month in the index's 22 years.

Canada's retail sales report for October is due on Friday.

Canadian government bond yields rose across a steeper curve in sympathy with US Treasuries. The 10-year was up 1.9 basis points at 0.747%.