Canadian dollar posts one-week high as Trump downplays changes to trade ties
By Fergal Smith
TORONTO (Reuters) - The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Monday as U.S. President Donald Trump downplayed potential changes to trade ties between the United States and Canada.
Trump, who held a joint news conference with Canadian Prime Minister Justin Trudeau, said the United States will be "tweaking" its trade relationship with Canada, unlike its trade ties with Mexico, where it faces a more severe situation.
Canada may have most to lose if a proposed renegotiation of the North American Free Trade Agreement (NAFTA) weakens trade between Canada and the United States.
Spending by Americans affects one-fifth of Canada's economy, while spending by Canadians affects less than 3 percent of U.S. gross domestic product, BMO Capital Markets said in a research note.
The U.S. dollar .DXY rose against a basket of major currencies as investors focused again on the U.S. reflation trade and braced for testimony by Federal Reserve chief Janet Yellen this week.
"The key event this week will be whether or not Yellen signals a March rate hike, and if she doesn't, there is a very good chance that dollar-CAD could break below the C$1.30 mark," said Bipan Rai, senior macro strategist at CIBC Capital Markets.
Gains for the loonie came even as U.S. crude CLc1 prices settled 93 cents lower at $52.93 a barrel, pressured by a stronger greenback and signs of rising U.S. crude output. Oil is one of Canada's major exports.
The Canadian dollar CAD=D4 ended at C$1.3075 to the greenback, or 76.48 U.S. cents, slightly stronger than Friday's close of C$1.3085, or 76.42 U.S. Continued...