The Canadian dollar rose to a near two-month high against its U.S. counterpart on Thursday as the greenback broadly fell ahead of a Federal Reserve policy meeting, while investors weighed the policy implications of a potentially divided U.S. Congress.
The loonie was trading 0.6 per cent higher at 1.3060 to the greenback, or 76.57 U.S. cents. The currency touched its strongest intraday level since Sept. 7 at 1.3048.
The safe-haven U.S. dollar slumped against a basket of other major currencies as traders braced for the outcome of a Fed meeting that might hint at more stimulus and global stock markets rallied.
Still, a divided Congress after the U.S. election, regardless of the outcome of a hotly contested White House race, could lead to policy gridlock in Washington, raising doubts over prospects for a large coronavirus relief package. A large economic package would bolster the outlook for Canada’s commodity-linked currency, FX strategists said in a Reuters poll.
The price of oil, one of Canada’s major exports, was down 0.7 per cent at $38.88 a barrel.
Canada’s jobs report for October is due on Friday, which could offer some clues about the strength of Canada’s economic recovery.
Canadian government bond yields were lower across the curve, with the 10-year down 0.7 basis points at 0.605 per cent.
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