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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 were up 1.3 per cent 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.

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At 10:23 a.m., the Canadian dollar was trading 0.1 per cent 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 per cent.

The ratio of Canadian household debt-to-income widened to 174.0 per cent in the third quarter from a downwardly revised 173.4 per cent 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 rose 1.5 cents to yield 1.693 per cent and the 10-year was up 12 cents to yield 1.657 per cent.

The 10-year yield touched its highest intraday level since May 23 at 1.695 per cent.

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