Canadian dollar rises as investors weigh US stimulus prospects

TORONTO: The Canadian dollar edged higher against its US counterpart on Monday as investors weighed the prospect of additional US economic stimulus, with the currency steadying after a large decline on Friday.

The loonie was trading 0.1% higher at 1.2717 to the greenback, or 78.63 US cents, having traded in a range of 1.2687 to 1.2736.

On Friday, the Canadian currency weakened 0.8%, its biggest decline in nearly three months, as new COVID-19 restrictions in China weighed on oil prices. Oil is one of Canada's major exports.

US crude prices dipped 0.2% to $52.15 a barrel on Monday as worries about demand due to renewed lockdowns competed with support from US stimulus plans.

Officials in President Joe Biden's administration tried to head off Republican concerns that his $1.9 trillion pandemic relief proposal was too expensive on a Sunday call with Republican and Democratic lawmakers.

Biden and Canadian Prime Minister Justin Trudeau agreed to meet next month, the prime minister's office said on Friday following a call between the two leaders in which they vowed to join forces to combat the pandemic in North America.

Canadian government bond yields were lower across a flatter curve in sympathy with US Treasuries. The 10-year eased 2.1 basis points to 0.825%, extending a pullback from a 10-month high on Thursday at 0.892%.

Canada's GDP data for November is due on Friday, which could help guide interest rate expectations.

Last week, the Bank of Canada held its key overnight interest rate at 0.25%, saying the arrival of a COVID-19 vaccine and stronger foreign demand is brightening the outlook for the Canadian economy in the medium term.