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CANADA FX DEBT-Market 'darling' Canadian dollar near 3-year high as stocks climb

Fergal Smith
·2-min read

(Adds dealer quotes and details throughout; updates prices) * Canadian dollar little changed against greenback * Loonie hits 1.2590, strongest level since April 2018 * Price of U.S. oil settles 18 cents lower * Canadian bond yields rise across steeper curve By Fergal Smith TORONTO, Jan 21 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Thursday, holding near its strongest level in nearly three years as global equity markets advanced and after the Bank of Canada left interest rates unchanged a day earlier. The loonie was trading nearly unchanged at 1.2630 to the greenback, or 79.18 U.S. cents. Earlier in the session, it touched its strongest level since April 2018 at 1.2590. "The loonie is still the darling of the market place," said Amo Sahota, director at Klarity FX in San Francisco. "When global equities keep going up, it's really hard to fight that trend." Speculators have turned bullish on the Canadian dollar since December, according to data from the U.S. Commodity Futures Trading Commission. World stock markets racked up record highs on Thursday and the U.S. dollar fell as investors bet that U.S. President Joe Biden's push for another massive stimulus package and unswerving global central bank support would cushion economies from the coronavirus crisis. Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global economic outlook. Oil settled 18 cents lower at $53.13 a barrel after industry data showed a surprise increase in U.S. crude inventories. The arrival of COVID-19 vaccines and stronger foreign demand have brightened the outlook for the Canadian economy in the medium term, the Bank of Canada said on Wednesday. The central bank opted against cutting interest rates and signaled it would reduce the pace of bond purchases as it gains confidence in the strength of the economic recovery. Canada's retail sales report for November is due on Friday. Canadian government bond yields were higher across a steeper curve, with the 30-year up 3.7 basis points at 1.496%. It touched its highest intraday level since last February at 1.504%. (Reporting by Fergal Smith; Editing by Andrea Ricci and Paul Simao)