Canadian dollar extends rebound as economic optimism grows

TORONTO (Reuters) - The Canadian dollar edged higher against its U.S. counterpart on Wednesday, as investors bet that global economic recovery would be sustained despite the fast-spreading Omicron coronavirus variant and a domestic estimate showed factory sales rising in November.

Global equity markets and the price of oil, one of Canada's major exports, added to the previous day's rally even as a growing number of countries announced restrictions to reduce the spread of the new variant.

U.S. crude prices rose 0.4% to $71.41 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2880 to the greenback, or 77.64 U.S. cents.

The currency traded in a range of 1.2877 to 1.2924, after touching on Monday its weakest level since December 2020 at 1.2963.

Canadian factory sales rose 3.1% in November, driven mostly by higher sales in the primary metal, transportation equipment, and petroleum and coal products industries, Statistics Canada said in a preliminary estimate.

Canada's GDP report for October, due on Thursday, could offer further clues on the strength of the domestic economy.

Canadian government bond yields were mixed across a steeper curve. The 10-year rate touched its highest level since Dec. 13 at 1.465% before dipping to 1.455%, up one and a half basis points on the day.

(Reporting by Fergal Smith; Editing by Kirsten Donovan)