CANADA FX DEBT-Canadian dollar touches an eight-day high as risk appetite improves

By Fergal Smith

TORONTO, Aug 6 (Reuters) - The Canadian dollar strengthened to an eight-day high against its U.S. counterpart on Wednesday as risk appetite picked up and the downturn in Canada's services economy eased.

The loonie CAD= was trading 0.2% higher at 1.3745 per U.S. dollar, or 72.75 U.S. cents, its fourth straight day of gains. The currency touched its strongest intraday level since July 29 at 1.3740.

"We're seeing the Canadian dollar strengthen a little bit despite uncertainty with trade talks still going," said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc. "Markets have been a bit more risk-on today, and that's helped the Canadian dollar."

Mexican President Claudia Sheinbaum ruled out a bilateral trade agreement with Canada when asked about the possibility, following what she called a "very good" meeting with top Canadian government ministers a day earlier.

Wall Street rose, supported by a string of largely upbeat corporate earnings and rising expectations of a Federal Reserve interest rate cut.

The U.S. dollar <.DXY< lost ground against a basket of major currencies and the price of oil CLc1, one of Canada's major exports, was up 0.5% at $65.48 a barrel.

S&P Global's Canada services PMI data showed that the pace of decline of new business activity has slowed and firms have grown more optimistic about the outlook for activity. The headline Business Activity Index rose to 49.3 last month from 44.3 in June, marking the highest level since November.

Separate data showed that Toronto home sales rose 13% month-over-month in July, which is the biggest increase since October 2024.

Canadian bond yields edged higher across a steeper curve, tracking moves in U.S. Treasuries. The 10-year yield CA10YT=RR was up 1.5 basis points at 3.396%, extending its rebound from a four-week low of 3.360% that it touched during Wednesday's session.