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Canadian dollar strengthens 0.6% against the greenback
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Trades in a range of 1.3152 to 1.3261
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Price of U.S. oil settles 1.5% higher
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Canadian bond yields ease across the curve
By Fergal Smith
TORONTO, July 31 (Reuters) – The Canadian dollar strengthened against its U.S. counterpart on Monday as rising hopes that a global economic downturn can be avoided helped underpin commodity-linked currencies.
The loonie was trading 0.6% higher at 1.3172 to the greenback, or 75.92 U.S. cents, after moving in a range of 1.3152 to 1.3261. For the month of July, it was up 0.5%.
“Month-end investor flows are buying commodity currencies today,” said Michael Goshko, senior market analyst at Convera Canada ULC. “Last week’s solid U.S. data … seems to have crystallized the ‘soft landing’ narrative, which would logically favor commodity currencies.”
On Thursday, a U.S. Commerce Department report showed the economy grew faster than expected in the latest quarter.
Canada is a major producer of commodities, including oil, which climbed to a three-month high on expectations that Saudi Arabia will extend voluntary output cuts into September and tighten global supply. U.S. crude oil futures settled 1.5% higher at $81.80 a barrel.
Other commodity-linked currencies, such as the Australian and New Zealand dollars , also posted solid gains.
Adding to tailwinds for the loonie, dock workers on Canada’s West Coast and their employers said they reached a new labor agreement, averting an immediate strike, as they sought to end a dispute that has disrupted operations at the country’s busiest ports.
Canada’s employment report for July is awaited on Friday for clues on the strength of the domestic economy. Economists forecast a 21,100 jobs gain.
Canadian government bond yields were lower across the curve, tracking moves in U.S. Treasuries. The 10-year eased 2.4 basis points to 3.496%. (Reporting by Fergal Smith in Toronto Editing by Matthew Lewis)
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