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The Canadian dollar rose to a four-week high against its U.S. counterpart on Monday, as oil prices edged higher after a landmark deal by OPEC and its allies to cut output.

The Canadian dollar was at $1.387 to the greenback, or 72.09 U.S. cents, stronger than Friday’s close of $1.3953, or 71.7 U.S. cents.

The price of oil, one of Canada’s major exports, fluctuated on Monday as the positive impact of major producers agreeing on record global output cuts was offset by concerns the reductions will not be sufficient to reduce a glut as the coronavirus outbreak hammers demand.

Brent futures rose 26 cents, or 0.8 per cent, to settle at US$31.74 a barrel.

OPEC and allies led by Russia agreed on Sunday to the output cut to prop up oil prices amid the COVID-19 pandemic and said they had an unprecedented deal with fellow oil nations, including the United States, to curb global oil supply by 20 per cent.

Measures to slow the spread of the coronavirus have destroyed demand for fuel and driven down oil prices, straining budgets of oil producers.

“Oil markets remain on volatile ground given the significant reduction in demand,” said Joe Manimbo, senior market analyst at Western Union Business Solutions.

“Canada’s main event risk arrives with a Bank of Canada decision Wednesday. Central bankers’ assessment of the economy and their willingness to do more to support growth will be of critical importance in shaping loonie sentiment,” Manimbo said.

The Bank of Canada is set to release an interest rate decision on Wednesday.

Canadian government bond prices were little changed with the yield on the benchmark 10-year down about 1 basis point at 0.748 per cent.

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