The Canadian dollar climbed to a five-day high on Wednesday as the country’s legislators approved a stimulus package to help ease the economic impact of the coronavirus outbreak.
Canada’s C$27 billion aid package will give people affected by the outbreak C$2,000 a month and delay student loan repayments, among other measures, Prime Minister Justin Trudeau said.
“The Canadian government wrote itself a blank check to fight the coronavirus and that is an incredibly powerful tool,” said Adam Button, chief currency analyst at ForexLive. “At some point the markets are going to focus on which countries can weather this storm best.”
At 31 per cent, Canada’s federal debt as a share of the economy is low compared to some other major countries.
At 12:27 p.m., the Canadian dollar was trading 1 per cent higher at 1.4314 to the greenback, or 69.86 U.S. cents.
The currency touched its strongest intraday level since last Friday at 1.4298. It was the second best G10 currency after Norway’s crown .
U.S. senators will vote on Wednesday on a $2 trillion bipartisan package of legislation to alleviate the devastating economic impact of the coronavirus pandemic. The U.S. dollar
fell as the U.S. package steadied money market nerves and prompted investors to buy back into ‘riskier’ currencies.
Canada is a major exporter of commodities, including oil, which has been pummeled by demand destruction related to the virus and a price war between major producers. U.S. crude prices were flat at about $24 a barrel.
“I think the drama for the Canadian dollar remains in oil,” Button said.” “Crude is barely hanging on as are Canadian producers.”
Canadian bond yields fell across a flatter curve. The 10-year was down 7.6 basis points at 0.795 per cent.
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