Canadian dollar notches one-week high as investors bet on trade deal

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

TORONTO (Reuters) - The Canadian dollar rose to its highest in one week against its broadly stronger U.S. counterpart on Wednesday, as oil prices climbed and investors bet that the United States and China would resolve their trade dispute.

U.S. stocks added to this week’s gains, buoyed by hopes that the ongoing U.S.-China trade talks could result in an agreement.

A trade deal could boost prospects for Canada’s economy as a major producer of commodities, including oil.

U.S. crude prices were up 2 percent at $54.18 a barrel, supported by a decline in U.S. oil inventories and after top exporter Saudi Arabia said it would cut crude exports and deliver an even deeper cut to its production.

The U.S. dollar rose against a basket of other major currencies after U.S. data for January that showed steady 2.2 percent core inflation, a measure that excludes frequently volatile energy and food prices.

At 10:16 a.m. (1516 GMT), the Canadian dollar was trading 0.1 percent higher at 1.3222 to the greenback, or 75.63 U.S. cents. The currency touched its strongest since Feb. 6 at 1.3197.

Canadian home prices fell 0.1 percent in January, the fourth consecutive month of decline, led by weakness in major Western Canadian cities, the Teranet-National Bank Composite House Price Index showed.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 4.5 Canadian cents to yield 1.822 percent and the 10-year declined 21 Canadian cents to yield 1.943 percent.

Reporting by Fergal Smith