Canadian dollar gains as oil prices climb, greenback dips

Thu Feb 23, 2017 5:25pm EST
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By Alastair Sharp

TORONTO (Reuters) - The Canadian dollar gained against its U.S. counterpart on Thursday, helped by stronger oil prices and a broader pullback for the greenback on a perceived lack of progress on U.S. tax reform a day after the release of Federal Reserve minutes seen as dovish.

Gains for the loonie came as U.S. Treasury Secretary Steven Mnuchin said he does not see any changes to the North American Free Trade Agreement in the short term and that he wanted to see tax reform passed before an August recess.

Canada sends 75 percent of its exports to the United States and could suffer badly if U.S. President Donald Trump follows through on promises to renegotiate NAFTA.

"We're in consolidation mode right now, waiting for either more policy announcements out of Trump, waiting for more central bank announcements," said Blake Jespersen, a managing director for foreign exchange sales at BMO Capital Markets.

"The Canadian dollar did a bit better on the back of stronger oil" after failing to push much beyond C$1.32 in the prior session, he said.

"It was a combination of large flows up there and oil turned around and momentum went back the other way," he added.

The Canadian dollar CAD=D4 settled at C$1.3114 to the greenback, or 76.25 U.S. cents, stronger than Wednesday's close of C$1.3144, or 76.08 U.S. cents.

The currency's weakest level of the session was C$1.3169, while it touched its strongest since Monday at C$1.3083.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch