TORONTO (Reuters) - The Canadian dollar strengthened to a five-week high against its U.S. counterpart on Friday, adding to this week's rally as investors welcomed a trade deal between the United States and China.
U.S. stocks were modestly higher after China said first phase trade talks with the United States have achieved major progress and that Beijing would cancel tariffs scheduled to take effect on Sunday.
U.S. crude oil futures (CLc1) were up 1.3% at $59.94 a barrel as hopes of progress in resolving the U.S.-China trade dispute and Britain's general election result appeared to lift two clouds that have been hanging over investor risk appetite.
At 10:23 a.m. (1523 GMT), the Canadian dollar was trading 0.1% higher at 1.3171 to the greenback, or 75.92 U.S. cents. The currency touched its strongest intraday level since Nov. 6 at 1.3151.
For the week, the loonie was on track to rise 0.6%.
The ratio of Canadian household debt-to-income widened to 174.0% in the third quarter from a downwardly revised 173.4% in the second quarter, Statistics Canada said.
The Bank of Canada has worried that an interest rate cut could add to near record levels of household indebtedness.
On Thursday, Bank of Canada Governor Stephen Poloz said a recent weakening in Canada's labor market, underscored by major job losses in November, is unlikely to weigh heavily on future monetary policy decisions.
Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year (CA2YT=RR) rose 1.5 Canadian cents to yield 1.693% and the 10-year (CA10YT=RR) was up 12 Canadian cents to yield 1.657%.
The 10-year yield touched its highest intraday level since May 23 at 1.695%.
