CANADA FX DEBT-Canadian dollar rises on positive investor sentiment

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* Canadian dollar strengthens 0.2% against greenback * Loonie trades in a range of 1.2351 to 1.2393 * Price of U.S. oil rises 0.6% * Canadian bond yields ease across a flatter curve By Fergal Smith TORONTO, Oct 26 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Tuesday as oil prices and global stock markets rose, but gains were capped ahead of a Bank of Canada interest rate decision on Wednesday. Shares around the world gained, with upbeat corporate earnings buoying European shares. Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to changes in risk appetite. "The CAD is trading in-line with most pro-risk currencies for now," Bipan Rai, North America head of FX strategy at CIBC Capital Markets, said in a note. Oil prices remained near multi-year highs, supported by a global supply shortage and strong demand in the United States, the world's biggest consumer. U.S. crude prices rose 0.6% to $84.22 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2359 to the greenback, or 80.91 U.S. cents. The currency traded in a range of 1.2351 to 1.2393. Last Thursday, it touched its strongest level in nearly four months at 1.2287. The Bank of Canada is expected to raise its inflation forecast and to largely end stimulus from its pandemic-era bond-buying program, starting a countdown of sorts to the first interest rate hike since October 2018. Money markets see four rate hikes next year. "We expect the BoC to push back a bit against market pricing for an aggressive rate hike profile for next year," Rai said. Canadian Prime Minister Justin Trudeau, who fell short of winning a majority government in last month's election, will introduce a Cabinet on Tuesday that analysts say should hone in on the fight against climate change. Canadian government bond yields were lower across a flatter curve, tracking the move in U.S. Treasuries. The 10-year yield eased 2.1 basis points to 1.632%, after touching on Friday its highest level since January of 2020 at 1.713%. (Reporting by Fergal Smith Editing by Paul Simao)

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