TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday, helped by higher oil prices and the prospect of advanced construction of the Keystone XL pipeline.
U.S. President Donald Trump intends to sign two executive actions on Tuesday that would advance construction of Keystone XL and Dakota Access pipelines, an administration official told Reuters.
TransCanada Corp’s proposed Keystone XL pipeline had been rejected by the Obama administration because of environmental concerns.
U.S. crude CLc1 prices were up 0.80 percent at $53.17 a barrel, helped by news of lower production by OPEC and other key exporters. [O/R]
Oil is one of Canada’s major exports.
At 9:38 a.m. ET (1438 GMT), the Canadian dollar CAD=D4 was trading at C$1.3201 to the greenback, or 75.75 U.S. cents, stronger than Monday’s close of C$1.3267, or 75.37 U.S. cents.
The weakest level of the session was C$1.3299, while the loonie touched its strongest since Jan. 18 at C$1.3200.
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.
Trump’s push to renegotiate the North American Free Trade Agreement threatens the Canadian economy. Canada sends more than 75 percent of its exports to the United States.
The head of a business advisory council to Trump played down on Monday the risk to Canada from any changes to NAFTA.
A planned EU-Canada free-trade deal moved closer to reality on Tuesday after a key committee advised the European Parliament to give its backing after months of protests and heated debate.
Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries and German Bunds as the euro zone started 2017 by maintaining solid economic growth.
The two-year CA2YT=RR price fell 2 Canadian cents to yield 0.76 percent and the benchmark 10-year CA10YT=RR declined 26 Canadian cents to yield 1.712 percent.
Yields had dipped on Monday as Trump’s tough stance on trade spurred safe-haven demand for bonds.
Reporting by Fergal Smith; Editing by Bill Trott