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The Canadian dollar strengthened against its U.S. counterpart on Wednesday, with the loonie recovering from an earlier two-week low as investors decided that potential Canadian asset sales by Saudi Arabia will have a short-lived impact on the currency.

The Saudi central bank and state pension funds have instructed their overseas asset managers to dispose of their Canadian equities, bonds and cash holdings “no matter the cost,” after Ottawa criticized the arrest of a female activist, the Financial Times reported, citing sources.

The kingdom said on Wednesday there is no room for mediation in the deepening diplomatic dispute.

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“There has been some two-way volatility, indicative of not just price pressures on commodity currencies but also, of course, the headlines about Saudi Arabia,” said Bipan Rai, executive director and North America head, FX strategy at CIBC Capital Markets.

“Then we have seen the CAD gain ground somewhat as some of the fog has cleared and investors slowly come to the realization that any sort of impact on the CAD from the Saudi selling should be ephemeral.”

CIBC estimates that Canadian dollar-denominated FX reserves held by Saudi Arabia to be roughly $10 billion to $25 billion, or less than 10 percent of daily volume in the currency.

The price of oil , one of Canada’s major exports, settled more than 3 percent lower after Chinese import data showed a slowdown in demand and as a trade dispute between Washington and Beijing escalated.

Canada runs a current account deficit, so its economy could be hurt if the flow of trade or capital slows.

At 3:36 p.m. EDT, the Canadian dollar was trading 0.3 percent higher at $1.3013 to the greenback, or 76.85 U.S. cents. The currency’s strongest level of the session was $1.3007, while it touched its weakest since July 25 at $1.3121.

On Tuesday, the loonie reached its strongest in nearly eight weeks at $1.2963. It benefited over recent days from data showing stronger-than-expected growth in Canada’s economy in May and a record high for the country’s exports in June.

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The value of Canadian building permits unexpectedly dropped by 2.3 per cent in June from May on weakness in the residential sector.

Canada’s jobs data for July is due on Friday.

Canadian government bond prices were mixed across a flatter yield curve, with the 10-year rising 4 cents to yield 2.365 percent.

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