TORONTO (Reuters) - The Canadian dollar strengthened to its highest in nearly two weeks against its U.S. counterpart on Monday, after Washington and Beijing’s agreement for a ceasefire in their trade war boosted oil prices and stocks.
Stocks and the price of oil, one of Canada’s major exports, climbed after the United States and China agreed to a 90-day truce in a trade dispute, and ahead of a meeting this week of the Organization of the Petroleum Exporting Countries that is expected to cut supply.
U.S. crude CLc1 prices were up 4.2 percent at $53.05 a barrel.
The lower price of oil since October has weighed on the outlook for Canada’s economy, with the potential impact worsened by a historically big discount for Canadian heavy crude.
Alberta Premier Rachel Notley said on Sunday that the Western Canadian province would mandate temporary oil production cuts to deal with a pipeline bottleneck that has led to a glut of crude in storage and driven down Canadian crude prices.
At 9:51 a.m. (1451 GMT), the Canadian dollar CAD=D4 was trading 0.8 percent higher at 1.3173 to the greenback, or 75.91 U.S. cents, its biggest gain since Sept. 28. The currency touched its strongest level since Nov. 20 at 1.3160.
Gains for the loonie came ahead of a Bank of Canada policy decision on Wednesday. Data on Friday showing Canada’s economic growth slowed in the third quarter has underpinned market expectations that the central bank will not hike interest rates this week.
The Bank of Canada will next raise interest rates early next year, according to a strong majority of economists polled by Reuters who still say two more rate rises will follow by end-2019.
Canada’s manufacturing sector expanded in November at the fastest pace in three months, boosted by a pickup in new orders and the strongest job creation in at least eight years, data showed on Monday.
Canada’s trade report for October is due on Thursday and the November employment report is due on Friday.
U.S. President Donald Trump said on Saturday he will give formal notice to the U.S. Congress in the near future to terminate the North American Free Trade Agreement (NAFTA), giving six months for lawmakers to approve a new trade deal signed on Friday.
Canadian government bond prices were lower across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR fell 12 Canadian cents to yield 2.283 percent.
Reporting by Fergal Smith