Canadian dollar strengthens as Trump revives Keystone XL pipeline
By Alastair Sharp
TORONTO (Reuters) - The Canadian dollar hit its strongest close in a week against its U.S. counterpart on Tuesday as U.S. President Donald Trump signed an executive order putting the Keystone XL pipeline back in play.
"That last bastion of dollar bulls got squeezed out today," said Darcy Browne, managing director of foreign exchange sales at CIBC Capital Markets, adding that signs Canada may escape the worst effects of a renegotiation of the NAFTA trade pact also boosted sentiment.
"There are people trying to stay long U.S. dollars on the back of the fundamentals, on the back of the central bank divergence, on the difference of the rate spreads, but it's not parlaying into the price of the currency because it's the political landscape that's shaping the short-term market," he said.
Trump signed orders smoothing the path for Keystone and for the Dakota Access oil pipeline on Tuesday, rolling back key Obama administration environmental actions in favor of expanding energy infrastructure.
If constructed, Keystone would provide oil producers in Canada with a quicker route to send crude to U.S. Gulf Coast refiners. Oil is one of Canada's major exports.
The Canadian dollar CAD=D4 settled at C$1.3161 to the greenback, or 75.98 U.S. cents, stronger than Monday's close of C$1.3267, or 75.37 U.S. cents, and its strongest settlement since Jan. 17.
It has moved sharply but remained within a C$1.30 to C$1.36 range since September.
The U.S. dollar .DXY recovered from a dip on fears that Trump's focus on protectionism over fiscal stimulus suggested his administration might be content to gain a competitive advantage through a weaker currency. Continued...