Canadian dollar steadies as U.S. stimulus uncertainty offsets Chinese data

Fergal Smith
Updated ·2 min read
A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar was little changed against its broadly weaker U.S. counterpart on Monday, giving back earlier gains, as an uncertain outlook for U.S. 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 U.S. crude oil futures <CLc1> settled 0.1% lower at $40.83 a barrel. Oil is one of Canada's major exports.

The Canadian dollar <CAD=> was trading nearly unchanged at 1.3184 to the greenback, or 75.85 U.S. 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 <.DXY> lost ground against a basket of major currencies on Monday, as sterling <GBP=> and the euro <EUR=> climbed.

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

Canadian government bond yields were mixed on Monday, with the 10-year <CA10YT=RR> 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 U.S. Homeland Security Department said.

(Reporting by Fergal Smith; Editing by Andrea Ricci and Sonya Hepinstall)