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Canadian dollar gains as stimulus hopes boost Wall Street

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar rose against the greenback on Tuesday, as the prospect of U.S. stimulus bolstered risk appetite and Prime Minister Justin Trudeau said Canada was pressing the incoming U.S. administration not to scuttle a major pipeline project.

The loonie was trading 0.2% higher at 1.2729 to the greenback, or 78.56 U.S. cents, having traded in a range of 1.2714 to 1.2763.

"Relatively firm oil prices, along with a risk-on backdrop, this morning supported the CAD," Ronald Simpson, managing director, global currency analysis, at Action Economics, said in a note.

Wall Street's main indexes rose as U.S. Treasury Secretary nominee Janet Yellen advocated for a hefty fiscal relief package to help the world's largest economy ride out a pandemic-driven slump.

Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures settled 1.2% higher at $52.98 a barrel.

Canada is pressing people at the highest levels of U.S. President-elect Joe Biden's incoming administration to reconsider canceling the Keystone XL pipeline, Prime Minister Justin Trudeau said.

Canadian factory sales decreased by 0.6% in November from December, the first drop in three months, Statistics Canada said. Separate data for the same month showed wholesale trade rising 0.7%.

Canada's inflation report for December and a Bank of Canada interest rate decision are due on Wednesday.

Analysts see a small chance of a 'micro rate cut," with the central bank moving its benchmark rate by less than 25 basis points, avoiding negative rates. The policy rate was last cut in March to a record low of 0.25%.

Canadian government bond yields were mixed across the curve, with the 10-year down half a basis point at 0.805%.

(Reporting by Fergal Smith; editing by Jonathan Oatis and Sonya Hepinstall)