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Market News Canadian dollar climbs to 3-week high on signs of easing trade tensions

The Canadian dollar edged lower against its U.S. counterpart on Thursday, pulling back from a three-week high reached after the Bank of Canada’s interest rate decision, as encouraging U.S. data boosted the greenback.

The U.S. dollar pared its decline against a basket of major currencies after data showed that U.S. services sector activity accelerated in August and private employers boosted hiring.

“We had strong U.S. data, which helped the dollar against a lot of things and the CAD had been a popular anti-dollar trade,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

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Selling of the currency against sterling on the likelihood that Brexit does not take place at the end of October added to pressure on the Canadian dollar, Anderson said.

At 3:45 p.m. (1945 GMT), the Canadian dollar was trading 0.1 per cent lower at 1.3230 to the greenback, or 75.59 U.S. cents. The currency’s weakest level was 1.3246, while it touched its strongest since Aug. 13 at 1.3192.

Stocks and the price of oil, one of Canada’s major exports, were supported by hopes of progress in resolving the U.S.-China trade feud. U.S. crude oil futures settled 4 cents higher at $56.30 a barrel.

The Canadian economy is showing “a welcome degree of resilience” to negative shocks, said Bank of Canada Deputy Governor Lawrence Schembri, one day after the central bank left its benchmark interest rate on hold at 1.75 per cent.

Chances of a cut at the next central bank meeting on interest rates on Oct. 30 have tumbled to about 40 per cent from nearly 70 per cent before Wednesday’s policy announcement.

Expectations could move again on Friday, when Canada’s employment report for August is due.

Canadian government bond prices were lower across the yield curve, in sympathy with U.S. Treasuries. The two-year fell 21 Canadian cents to yield 1.451 per cent and the 10-year was down 125 Canadian cents to yield 1.264 per cent.

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The 10-year yield touched its highest intraday level since Aug. 23 at 1.279 per cent.

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