May 9, 2018 / 1:36 PM / in 6 months

Canadian dollar rises from 7-week low as oil surge offsets NAFTA uncertainty

TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday, rebounding from a nearly seven-week low the day before, as a jump in oil prices countered uncertain prospects for talks on revamping the NAFTA trade pact.

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

At 4 p.m. (2000 GMT), the Canadian dollar CAD=D4 was trading 0.8 percent higher at C$1.2856 to the greenback, or 77.78 U.S. cents.

The currency traded in a range of C$1.2826 to C$1.2975. On Tuesday, it touched its weakest level since March 21 at C$1.2998.

“There is still NAFTA uncertainty lingering, but the higher oil prices are helping the Canadian dollar,” said Eric Viloria, a currency strategist at Wells Fargo.

U.S. crude oil futures CLc1 settled 3 percent higher after a bigger-than-expected drawdown in U.S. oil inventories extended gains from the U.S. decision to quit a nuclear deal with Iran.

Oil is one of Canada’s major exports.

Mexico has launched a counterproposal to U.S. demands to toughen automotive industry content rules under the North American Free Trade Agreement, officials said on Tuesday, as ministers again pushed for a deal to rework the 24-year-old accord.

Canada sends 75 percent of its exports to the United States. Its economy could benefit if a deal to revamp NAFTA is reached.

The value of Canadian building permits rose 3.1 percent in March, more than economists’ forecasts for a gain of 2.0 percent, on increased plans to build apartment buildings in the provinces of Quebec and British Columbia, data from Statistics Canada showed.

Canadian government bond prices were lower across a steeper yield curve as the yield on the benchmark U.S. government note rose back above the psychologically significant level of 3 percent.

Canada’s 10-year bond CA10YT=RR declined 33 Canadian cents to yield 2.391 percent. The yield touched its highest intraday level since Feb. 8 at 2.405 percent.

Canada’s jobs report for April is due on Friday.

Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney

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