Canadian dollar climbs to 11-day ahead of U.S. election night
Canadian dollar gains 0.4% against the greenback
Touches its strongest since Oct. 25 at 1.3846
Canada's services economy expands in October
Bond yields rise across the curve
By Fergal Smith
TORONTO, Nov 5 (Reuters) -The heavily shorted Canadian dollar strengthened to an 11-day high against its U.S. counterpart on Tuesday, with investors managing their currency risk as Americans headed to the polls and after data showed a pick-up in Canada's services sector.
The loonie CAD= was trading 0.4% higher at 1.3850 to the U.S. dollar, or 72.20 U.S. cents, after touching its strongest intraday level since Oct. 25 at 1.3846.
"We could just be seeing some position squaring. The Canadian dollar has been a heavily shorted currency," said Adam Button, chief currency analyst at ForexLive.
Speculators have raised their bearish bets on the Canadian dollar to the highest level since mid-August. 1090741NNET
"The Canadian dollar is one of the clear election night trades along with the Mexican peso in the foreign exchange market," Button said. "Both are highly leveraged to U.S. trade and global growth."
Republican former President Donald Trump, who is in a neck-and-neck race with Democratic Vice President Kamala Harris for the presidency, has proposed sweeping tariffs on imported goods. Canada sends about 75% of its exports to the United States, including oil.
The nation posted a higher-than-expected trade deficit of C$1.26 billion ($908 million) in September mainly on account of lower prices which pulled down the value of exports but overall volumes of outbound shipments rose.
Separate data showed that Canada's services economy expanded for the first time in five months in October. The headline business activity index rose to 50.4 from 46.4 in September.
The price of oil was up 1.3% at $72.37 a barrel, adding to its gains in the prior day when OPEC+ delayed plans to hike production.
Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year CA10YT=RR was up 5.8 basis points at 3.293%.
Reporting by Fergal Smith, Editing by William Maclean
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