The Canadian dollar rose for a sixth day as the discount the country faces on its biggest export, crude oil, reached its narrowest level in almost three months.
The currency gained against most of its 16 major peers after U.S. congressional negotiators reached a budget agreement that will limit spending cuts and reduce the deficit. Canada’s currency weakened beyond C$1.07 per U.S. dollar last week for the first time in three years on speculation the Federal Reserve may let borrowing costs rise by tapering bond-buying even as the the Bank of Canada keeps interest rates low amid inflation below its target band.
“We’re getting a higher price for our oil exports and that’s a net benefit for Canadian producers,” Scott Smith, senior market analyst at Cambridge Mercantile Group, a global foreign-exchange and payments provider, said by phone from Calgary. “We got the sense that the run-up we saw mid-November to early December, where we touched up to the high of C$1.07, that the long U.S. dollar trade was a little stretched.” A long position is a bet an asset will rise in value.
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