CANADA FX DEBT-C$ notches 3-year high as economic optimism offsets pipeline set-back – Reuters

    * Canadian dollar gains 0.1% against the greenback
    * Loonie touches its strongest since April 2018 at 1.2590
    * Price of U.S. oil falls 0.9%
    * Canadian bond yields rise across a steeper curve

    TORONTO, Jan 21 (Reuters) - The Canadian dollar strengthened
to a near three-year high against its U.S. counterpart on
Thursday, tracking gains for stock markets globally even as U.S.
President Joe Biden formally revoked the permit needed to build
the Keystone XL oil pipeline.
    World stocks racked up record highs and the U.S. dollar
       fell as investors bet major stimulus from Biden and
unswerving global central bank support would cushion the
coronavirus's economic damage.             
    Canada runs a current account deficit and is a major
producer of commodities, including oil, so the loonie tends to
be sensitive to the global economic outlook.
    Scrapping the permit for the Keystone XL pipeline dashed
Ottawa's hopes of salvaging the $8 billion project, which would
move oil from the province of Alberta to Nebraska.             
    U.S. crude oil futures        were down 0.9% at $52.85 a
barrel after industry data showed a surprise increase in U.S.
crude inventories that revived pandemic-related demand concerns.
            
    The Canadian dollar        was trading 0.1% higher at 1.2613
to the greenback, or 79.28 U.S. cents, having touched its
strongest intraday level since April 2018 at 1.2590.
    On Wednesday, the Bank of Canada opted against cutting
interest rates, saying the arrival of a COVID-19 vaccine and
stronger foreign demand is brightening the outlook for the
Canadian economy in the medium term.             
    The central bank signaled it would reduce the pace of bond
purchases as it gains confidence in the strength of the economic
recovery. 
    Canadian government bond yields were higher across a steeper
curve, with the 10-year             up 4.6 basis points at
0.874%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)
  

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