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Loonie touches weakest since April 2020 at 1.4268

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Price of U.S. oil decreases 0.6%

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10-year yield touches its highest since Nov. 28

By Fergal Smith

TORONTO, Dec 16 (Reuters) - The Canadian dollar touched

a 4-1/2-year low against its U.S. counterpart on Monday before

recouping its losses and Canadian bond yields rose, as investors

weighed the fiscal implications of the unexpected resignation of

Canada's finance minister.

The loonie was trading nearly unchanged at 1.4225 to

the U.S. dollar, or 70.30 U.S. cents, after touching its weakest

intraday level since April 2020 at 1.4268.

Canada's Finance Minister Chrystia Freeland resigned over a

policy clash with Prime Minister Justin Trudeau, dismissing his

plans for increased spending as "political gimmicks".

Freeland quit just hours before she was due to present a

fall economic update to parliament, a document widely expected

to show the minority Liberal government had run up a much larger

2023/24 budget deficit than predicted.

"In many places in the world, the resignation of the finance

minister would be a crushing blow to the currency but the market

appears to have fully discounted a period of political

uncertainty, and inevitable change in government," said Adam

Button, chief currency analyst at ForexLive.

Trudeau trails badly in polls ahead of an expected election

in 2025.

The U.S. dollar hovered close to a three-week high

versus other major currencies, ahead of a week of central bank

meetings in which markets expect the Federal Reserve to cut

interest rates but signal a measured pace of easing for 2025.

The price of oil, one of Canada's major exports, fell

0.6% to $70.88 a barrel as investors weighed weak consumer

spending data in China, the world's largest oil importer.

Canadian government bond yields moved higher across the

curve. The 10-year was up 3.7 basis points at

3.215%, after touching its highest intraday level since Nov. 28

at 3.234%.