July 29, 2020 / 1:12 PM / 7 days ago

CANADA FX DEBT-Loonie firms as 'weak USD tone' persists ahead of Fed decision

    * Canadian dollar rises 0.1% against the greenback
    * Loonie trades in a range of 1.3340 to 1.3387
    * Price of U.S. oil increases 0.7%
    * Canadian bond yields move higher across the curve

    By Fergal Smith
    TORONTO, July 29 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Wednesday as oil prices
climbed and rising coronavirus cases in the United States
weighed on the greenback, with the focus turning to a Federal
Reserve policy announcement.
    The loonie        was trading 0.1% higher at 1.3363 to the
U.S. dollar, or 74.83 U.S. cents. The currency, which on Tuesday
touched its strongest intraday level in nearly seven weeks at
1.3327, traded in a range of 1.3340 to 1.3387.
    "Support for the USD has been relatively firm in the low
1.33 range in the past week but the downside retains a
vulnerable look given the weak USD tone generally," strategists
at Scotiabank, including Shaun Osborne, said in a note.
    The U.S. dollar        fell to a two-year low against a
basket of major currencies on Wednesday as pressure built on the
Fed to strike a dovish policy stance at its interest rate
announcement later in the day amid record increases in COVID-19
infections in some U.S. states.             
    The price of oil, one of Canada's major exports, rose after
a surprise drop in U.S. crude inventories, but demand concerns
due to rising COVID-19 infections capped gains. U.S. crude
       prices were up 0.7% at $41.31 a barrel.             
    Canada's GDP report for May is due on Friday. It is expected
to show some recovery in the economy after a sharp contraction
in April.
    Canadian government bond yields were higher across the curve
on Wednesday, with the 10-year             up by half of a basis
point at 0.481%. On Tuesday, it hit its lowest intraday level
since June 15 at 0.472%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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