TORONTO (Reuters) - The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Tuesday, holding on to most of the gains that followed a deal over the weekend to keep Canada in a revamped NAFTA trade pact.
The deal to salvage the trilateral North American Free Trade Agreement has reduced uncertainty for Canada’s trade-dependent economy, boosting investor expectations for as many as four additional interest rate increases from the Bank of Canada by the end of 2019.
The first of those hikes is expected at the bank's Oct. 24 policy meeting. BOCWATCH
The U.S. dollar .DXY climbed against a basket of other major currencies as the euro was pressured by Italian political developments.
At 9:32 a.m. (1332 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at C$1.2817 to the greenback, or 78.02 U.S. cents, outperforming every other G10 currency except the safe-haven yen and Swiss franc.
The loonie, which on Monday touched its highest in more than four months at C$1.2783, traded in a range of C$1.2800 to C$1.2840.
The price of oil, one of Canada's major exports, remained near its highest since November 2014 as markets braced for tighter supply once U.S. sanctions against Iran kick in next month. The price of U.S. crude CLc1 was up 0.2 percent at $75.44 a barrel.
A massive liquefied natural gas (LNG) export project in Canada has been given the final go-ahead by project partners, LNG Canada said, making it the first major new project for the fuel to win approval in recent years.
Canadian government bond prices were higher across the yield curve, with the 10-year CA10YT=RR rising 16 Canadian cents to yield 2.487 percent. The yield on the 10-year on Monday reached 2.519 percent, its highest in more than four months.
The center-right Coalition Avenir Quebec, campaigning on a promise to curb immigration, won power for the first time in Canada’s Quebec province on Monday, dealing a blow to the Liberal incumbents.
The yield on Quebec’s 10-year bond fell 2.4 basis points to 3.092 percent, which was slightly more than the 1.9 basis point drop for Ontario’s bond of the same maturity.
Canada’s jobs data for September and August trade data are due on Friday.
Reporting by Fergal Smith; Editing by Steve Orlofsky
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