March 25, 2020 / 4:55 PM / 7 days ago

CANADA FX DEBT-Canadian dollar rallies 1% as legislators approve economic stimulus

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 1% against the greenback
    * Loonie touches its strongest since last Friday at 1.4298
    * Canada's House of Commons agrees to approve stimulus bill
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, March 25 (Reuters) - The Canadian dollar climbed to
a five-day high on Wednesday as the country's legislators
approved a stimulus package to help ease the economic impact of
the coronavirus outbreak.
    Canada's C$27 billion aid package will give people affected
by the outbreak C$2,000 a month and delay student loan
repayments, among other measures, Prime Minister Justin Trudeau
said.             
    "The Canadian government wrote itself a blank cheque to
fight the coronavirus and that is an incredibly powerful tool,"
said Adam Button, chief currency analyst at ForexLive. "At some
point the markets are going to focus on which countries can
weather this storm best."
    At 31%, Canada's federal debt as a share of the economy is
low compared to some other major countries.
    At 12:27 p.m. (1627 GMT), the Canadian dollar          was
trading 1% higher at 1.4314 to the greenback, or 69.86 U.S.
cents. 
    The currency touched its strongest intraday level since last
Friday at 1.4298. It was the second best G10 currency after 
Norway's crown       .
    U.S. senators will vote on Wednesday on a $2 trillion
bipartisan package of legislation to alleviate the devastating
economic impact of the coronavirus pandemic. The U.S. dollar
       fell as the U.S. package steadied money market nerves and
prompted investors to buy back into 'riskier' currencies.
                        
    Canada is a major exporter of commodities, including oil,
which has been pummeled by demand destruction related to the
virus and a price war between major producers. U.S. crude       
prices were flat at about $24 a barrel.             
    "I think the drama for the Canadian dollar remains in oil,"
Button said." "Crude is barely hanging on as are Canadian
producers."    
    Canadian bond yields fell across a flatter curve. The
10-year was down 7.6 basis points at 0.795%.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and Tom
Brown)
  
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