The Canadian dollar pared losses against its US counterpart on Tuesday from a session low hit after deadly blasts in Brussels, with the market bracing for a federal budget announcement expected to include significant fiscal stimulus. The explosions in the Belgian capital pushed investors towards the safety of gold and government bonds, while oil prices seesawed.
At 9:24 am EDT (1354 GMT), the Canadian dollar was trading at C$1.3098 to the greenback, or 76.35 US cents, barely weaker than the Bank of Canada's official Monday close of C$1.3085, or 76.42 US cents. Traders and strategists are awaiting the new Liberal government's first federal budget, which is due at 4 pm EDT. The government is expected to run a C$29 billion deficit in fiscal 2016-17, a Reuters poll last week showed, as it borrows more to increase infrastructure spending in the hopes of boosting growth.
The currency's strongest level of the session was C$1.3055, while its weakest level was C$1.3138. Canadian government bond prices were higher across the maturity curve, with the two-year price up 1 Canadian cent to yield 0.553 percent and the benchmark 10-year rising 6 Canadian cents to yield 1.296 percent. The Canada-US two-year bond spread was -30.3 basis points, while the 10-year spread was -61.3 basis points.
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