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The loonie is trading in a range of 1.3477 to 1.3526

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US oil price drops 0.8%

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Canadian bond yields fall across the curve

By Fergal Smith

TORONTO, Nov 8 (Reuters) – The Canadian dollar was little changed against its U.S. counterpart on Tuesday, with the currency holding near a key technical level as investors watched the U.S. midterm elections and awaited a key report on US inflation later this week.

The loonie was trading nearly unchanged at 1.3494 against the greenback, or 74.11 US cents, after trading in a range of 1.3477 to 1.3526.

“USD-CAD is probing tepidly below the key 1.35 bar that marks the cleavage of an H&S (head and shoulders) formation on the daily charts,” said Bipan Rai, head of FX America strategy. Nord at CIBC Capital Markets, in a note.

Penetrating the neckline of a head and shoulders formation can sometimes signal a reversal of a market trend.

“This is mostly a USD story for now, as we expect price action to remain tied to the US CPI print later this week,” Rai added.

U.S. inflation data for October, due Thursday, could offer clues to the prospects for further outsized interest rate hikes by the Federal Reserve.

The Bank of Canada also rose aggressively. As the central bank plans to raise interest rates at a slower pace, it is focusing on more timely inflation measures than generally seen, which could help it avoid tightening beyond the level necessary to alleviate price pressures.

Tuesday’s US election will determine control of Congress. This could lead to a political stalemate, including less fiscal stimulus.

The price of oil, one of Canada’s top exports, fell as worsening COVID-19 outbreaks in China heightened fears of lower fuel demand. US crude prices fell 0.8% to $91.02 a barrel.

Government of Canada bond yields fell across the curve, with 10-year bonds falling 3.9 basis points to 3.562%. (Reporting by Fergal Smith; editing by Jonathan Oatis)