June 2, 2020 / 1:41 PM / 2 months ago

CANADA FX DEBT-C$ climbs to 3-month high as investors focus on global recovery

    * Canadian dollar rises 0.3% against the greenback
    * Loonie touches its strongest since March 9 at 1.3493
    * Price of U.S. oil increases 1.2%
    * Canadian bond yields rise across a steeper curve

    TORONTO, June 2 (Reuters) - The Canadian dollar strengthened
to a near three-month high against its U.S. counterpart on
Tuesday as global stocks added to recent gains and ahead of an
interest rate decision by the Bank of Canada on Wednesday.
    World stocks          climbed to three-month highs as the
global coronavirus recovery effort won out over U.S.-China
tensions and the worst civil unrest in the United States in
decades.             
    Canada runs a current account deficit and is a major
producer of commodities, including oil, so its economy could
particularly benefit from a pickup in the global flow of trade
and capital.
    Oil prices rose to near three-month highs on expectations
that major producers would agree to extend output cuts that have
shored up prices. U.S. crude oil futures        were up 1.2% at
$35.88 a barrel.             
    The Canadian dollar        was trading 0.3% higher at 1.3530
to the greenback, or 73.91 U.S. cents. The currency touched its
strongest intraday level since March 9 at 1.3493.
    Recent gains for the loonie have come as the U.S. dollar
       lost its safe-haven shine. The greenback on Tuesday
extended its decline since March against a basket of major
currencies.             
    Economists say that Canada's economy likely bottomed out in
April when non-essential businesses across the country were
closed to help contain the coronavirus pandemic. Attention has
been turning to how fast the economy can recover and the
potential level of fiscal and monetary policy support.
    The Bank of Canada is expected to hold interest rates at a
record low of 0.25% on Wednesday, when Tiff Macklem will begin
his seven-year term as governor of the central bank.
            
    Canadian government bond yields were higher across a steeper
curve, with the 10-year             up 2.2 basis points at
0.556%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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