Canadian dollar firms as Brexit deal boosts global growth prospects

Canadian dollar firms as Brexit deal boosts global growth prospects

The Canadian dollar strengthened against its U.S. counterpart on Thursday after a trade deal was reached between Britain and the European Union, bolstering the global economic outlook, and domestic data showed a jump in the value of building permits.

The loonie rose 0.2% to 1.2817 to the greenback, or 78.02 U.S. cents, in thin holiday trading. It traded in a range of 1.2813 to 1.2853, having recovered from a near three-week low on Monday of 1.2955.

“The Brexit news is good for global growth and the Canadian dollar benefits from that,” said Adam Button, chief currency analyst at ForexLive.

Britain clinched a narrow Brexit trade deal with the European Union just seven days before it exits one of the world’s biggest trading blocs in its most significant global shift since the loss of empire.

Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the outlook for the global economy.

U.S. crude oil futures were up 0.2% at $48.22 a barrel, while Wall Street closed with a modest gain despite doubt as to whether a stimulus package passed by Congress on Monday would be signed into law.

After a volatile year for oil, the loonie has advanced less than the other G10 currencies. It was up 1.3% since the start of 2020.

The value of Canadian building permits rose by 12.9% in November from October, beating analysts’ estimate of a 3.0% gain, Statistics Canada data showed.

On Wednesday, a flash estimate from Statistics Canada showed the economy grew by 0.4% in November, despite the COVID-19 resurgence and fresh restrictions, though economists warned a drop back was coming.

Canadian government bond yields were mixed across a flatter curve on Thursday, with the 10-year easing by less than one basis point to 0.720%.

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Published at Thu, 24 Dec 2020 19:44:52 +0000