CAD gains as U.S. debt ceiling deal nears

TORONTO (Reuters) — The Canadian dollar edged higher against its U.S. counterpart on Monday, clawing back some recent declines, as a deal to temporarily suspend the U.S. debt ceiling boosted investor sentiment.

The loonie was trading 0.2% higher at 1.3584 to the greenback, or 73.62 U.S. cents, after moving in a range of 1.3584 to 1.3618. It touched on Friday its weakest intraday level since April 28 at 1.3654.

“The Canadian dollar has been able to extend its bounce from Friday thanks to a constructive risk mood following this past weekend’s U.S. debt ceiling deal,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.

Democratic President Joe Biden and Republican House of Representatives Speaker Kevin Mccarthy on Sunday signed off on the deal which could help prevent the U.S. defaulting on its debt.

The U.S. stock market was closed for Memorial Day but stock index futures and the price of oil, one of Canada’s major exports, moved higher. U.S. crude prices were up 0.3% at $72.87 a barrel.

Canadian GDP data is due for release on Wednesday. It is expected to show that the economy grew at an annualized rate of 2.5% in the first quarter.

The data could help guide expectations for next week’s interest rate decision by the Bank of Canada. Money markets see a roughly 30% chance of the central bank hiking its benchmark rate for the first time since January.