By Fergal Smith

TORONTO (Reuters) – The Canadian dollar edged higher against its broadly weaker U.S. counterpart on Monday as oil clawed back some of this month’s decline and stock markets rose globally, with the loonie finding some support after posting three straight weekly declines.

Wall Street surged in a broad rally as investors sought bargains among sectors hardest hit by the coronavirus recession, while the U.S. dollar <.DXY> pulled back from a two-month high against a basket of major currencies.

Investors are putting aside for now evidence of rising coronavirus cases, “thinking there is still the vaccine news to mitigate concerns about a second wave,” said Shaun Osborne, chief currency strategist at Scotiabank.

“But it has got to be a potential threat for risk assets going forward and that keeps the CAD a bit more defensive,” Osborne added.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

U.S. crude oil futures <CLc1> rose 0.9% to settle at $40.60 a barrel, while the Canadian dollar <CAD=> was trading 0.1% higher at 1.3373 to the greenback, or 74.78 U.S. cents. That was a much smaller gain than for some other G10 currencies.

The loonie, which on Friday hit a seven-week low at 1.3418, traded in a range of 1.3353 to 1.3403.

Quebec, the Canadian province hit hardest by the novel coronavirus, reported another sharp increase in daily infections, and media reports said Premier Francois Legault would announce new restrictions for Montreal and the capital, Quebec City.

Canadian government bond yields were mixed across a steeper curve, with the 10-year <CA10YT=RR> up less than a basis point at 0.552%.

Canada’s GDP data for July is due on Wednesday, which could help

WINNIPEG, Manitoba/WASHINGTON (Reuters) – A private-sector proposal endorsed by U.S. President Donald Trump to build a railway from Canada’s oil sands to ports in Alaska would free landlocked crude but faces numerous steep challenges.

Trump wrote on Twitter over the weekend that he would issue a permit for the Alaska-Alberta Railway Development Corporation (A2A Rail) project to move Alberta crude 1,600 miles (2,570 km) to the Alaskan coast, as well as freight in the other direction.

“I will be issuing a Presidential Permit for the A2A Cross-Border rail,” Trump said. He said his decision was based on the recommendation of fellow Republicans Dan Sullivan, a U.S. senator, and Don Young, a U.S. representative. Projects that cross the U.S. border require presidential permits.

The $17 billion project, which backers hope will be in service by the end of the decade, was first proposed in 2015 by Canadian infrastructure financier Sean McCoshen.

It could carry up to 2 million barrels of oil per day, along with potash, sulphur and grain that often back up at Canada’s Vancouver port, said Mead Treadwell, A2A’s vice-chair, Alaska.

“The diversity of commodities helps reduce the risk,” he said.

The case for A2A has involved often-congested pipelines that move Alberta crude to U.S refineries. However, new pipelines are now under construction.

Options to move crude from Canada, the world’s fourth-largest producer, are useful, but A2A is “a very challenged project,” said Dennis McConaghy, a former pipeline executive at TransCanada Corp, now known as TC Energy Corp TRP.TO.

Transportation costs to reach Asian or U.S. Gulf Coast refiners would be substantially higher than those involving pipelines, he added.

“This project makes sense if it’s absolutely the last resort,” McConaghy said.

A2A would require numerous regulatory clearances in the United States and Canada