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Canadian dollar falls as Wall Street retreats from record high

TORONTO (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as rising coronavirus cases weighed on investor sentiment, but a recovery in oil prices helped the loonie recoup some of its decline.

FILE PHOTO: Bank of Canada Governor Mark Carney holds the new Canadian 5 and 10 dollar bills, made of polymer, during an unveiling ceremony at the Bank of Canada in Ottawa April 30, 2013. REUTERS/Chris Wattie

The Canadian dollar CAD= was trading 0.2% lower at 1.3095 to the greenback, or 76.37 U.S. cents, having traded in a range of 1.3063 to 1.3116.

Wall Street’s main indexes fell, with the S&P 500 and the Dow retreating from record closing highs hit a day earlier, following disappointing U.S. retail sales data and a spike in COVID-19 cases across the country.

Canada sends about 75% of its exports to the United States, including oil.

U.S. crude oil futures CLc1 reversed an earlier decline to settle 0.2% higher at $41.43 a barrel. Hopes for a COVID-19 vaccine and the possibility of tighter supply policies from OPEC and some other major producers offset surging virus infections.

“There is a gradual recoupling of oil and the Canadian dollar under way at the moment,” said Adam Button, chief currency analyst at ForexLive.

“As the market transitions towards a post virus mode, everything in Canada becomes much more attractive; from banks to commodities to economic growth,” Button said.

Canadian wholesale trade increased by 0.9% in September from August, beating analyst expectations, while separate data showed that housing starts rose 3% in October compared with the previous month.

Canada’s inflation report for October is due on Wednesday.

Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR fell 3.2 basis points to 0.706%.

Climate change will have a profound impact on Canada’s economy and the country must mobilize quickly to mitigate the threat as well as capitalize on opportunities, Bank of Canada Governor Tiff Macklem said.

Reporting by Fergal Smith; Editing by Alistair Bell and Sandra Maler

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