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The Canadian dollar edged higher against its broadly stronger U.S. counterpart on Thursday as Wall Street clung to hopes of a U.S. coronavirus relief package and oil prices climbed, with the loonie reversing its earlier decline.

The Canadian dollar was trading 0.1 per cent higher at 1.3138 to the greenback, or 76.12 U.S. cents, having traded in a range of 1.3123 to 1.3177. Since the start of the month, the loonie has gained 1.4 per cent.

“The Canadian dollar is very much following the broader risk tone again today,” said Erik Bregar, Director and Head of FX Strategy at the Exchange Bank of Canada.

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The catalyst for the improvement in sentiment is not very clear, but traders have tended to respond positively to comments on stimulus prospects from U.S. House of Representatives Speaker Nancy Pelosi, Bregar said.

Pelosi said negotiators were making progress in talks with the Trump administration for another round of financial aid and that legislation could be hammered out “pretty soon.”

Shares on Wall Street gained in choppy trading, as investors cheered the prospect of more stimulus to support a pandemic-damaged U.S. economy, with more data pointing to a slowing labor market recovery.

Canada sends about 75 per cent of its exports to the United States, including oil. U.S. crude oil futures settled 1.5 per cent higher at $40.64 a barrel, while the U.S. dollar rebounded from seven-week lows against a basket of major currencies.

The Canadian economic recovery from the coronavirus recession will be significantly slower than previously thought, with a high risk a resurgence in cases will halt the rebound underway, according to a Reuters poll of economists.

Canadian government bond yields moved higher across a steeper curve in sympathy with U.S. Treasuries. The 10-year

rose 2.4 basis points to 0.643 per cent.

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On Wednesday, it touched its highest intraday level in nearly eight weeks at 0.679 per cent.

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