(Adds analyst quotes and details throughout, updates prices)
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Canadian dollar gains 0.5% against the greenback
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Touches its strongest since Sept. 21 at 1.3388
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Price of U.S. oil settles 3.1% lower
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Canadian bond yields ease across flatter curve
TORONTO, Nov 8 (Reuters) - The Canadian dollar strengthened to its highest level in nearly seven weeks against its U.S. counterpart on Tuesday as the greenback broadly lost ground and the confirmation of a key technical formation improved the outlook for the currency.
The loonie was trading 0.5% higher at 1.3425 to the greenback, or 74.49 U.S. cents, after touching its strongest level since Sept. 21 at 1.3388.
"It broke out this morning on broad U.S. dollar selling. The rise in the stock market triggered that," said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
Wall Street climbed during voting in midterm elections that will determine control of the U.S. Congress, with investors betting on a political stalemate that could prevent major policy changes.
The price action for USD-CAD in recent days has confirmed "a bearish head and shoulders pattern," Bregar said, adding "I think we could see 1.32 or 1.33 over the next month or two."
Confirmation of a head and shoulders formation can sometimes signal the reversal of a market trend
Investors were awaiting U.S. inflation data on Thursday for clues on the outlook for further outsized interest rate hikes by the Federal Reserve.
The Bank of Canada has also been hiking aggressively. As the central bank considers raising interest rates at a slower pace, it is focusing on inflation measures that are more timely than typically observed, which could help it avoid tightening beyond the level needed to subdue price pressures.
The price of oil, one of Canada's major exports, slipped as worsening COVID-19 outbreaks in China heightened fears of lower fuel demand. U.S. crude prices settled 3.1% lower at $88.91 a barrel.
Canadian government bond yields were lower across a flatter curve, with the 10-year falling 12.5 basis points to 3.476%. (Reporting by Fergal Smith; editing by Jonathan Oatis)
