- Canadian dollar gains 0.7% against the greenback
- Touches a near three-week high at 1.4280
- Price of U.S. oil increases 1.1%
- Bond yields rise across a steeper curve
TORONTO, Jan 6 (Reuters) - The Canadian dollar rose to a near three-week high against its U.S. counterpart on Monday, as investors weighed the potential for Canada's economy to escape broad-based U.S. tariffs and a report that Canadian Prime Minister Justin Trudeau would resign.
The loonie was trading 0.7% higher at 1.4350 to the U.S. dollar, or 69.69 U.S. cents, after touching its strongest intraday level since Dec. 17 at 1.4280.
Trudeau will announce on Monday that he intends to step down as Liberal leader but he will stay on in his post until the party has chosen a replacement, CBC News reported, citing sources.
Analysts say that investors could welcome greater political clarity after increased calls for Trudeau to step aside since December, as well as the prospect of a more market friendly government.
"News that Justin Trudeau will resign is helping to underpin loonie gains," said Nick Rees, senior FX market analyst at Monex Europe Ltd. "Markets have become disillusioned with Trudeau - his administration having presided over a period of economic stagnation."
The U.S. dollar slumped against a basket of major currencies after a report said President-elect Donald Trump was mulling tariffs that would only be applied to critical imports, potentially a relief for countries such as Canada that were expecting broader levies.
Trump, who is due to take office on Jan. 20, has threatened to impose a 25% tariff on all imports from Canada.
The price of oil, one of Canada's major exports, rose to its highest level since mid-October as colder weather spurred buying. U.S. crude oil futures were up 1.1% at $74.74 a barrel.
Canadian bond yields rose across a steeper curve, tracking moves in U.S. Treasuries. The 10-year yield was up 1.8 basis points at 3.250%.
Reporting by Fergal Smith
Source: Reuters