Canadian dollar rises as investors eye further cuts to BoC stimulus

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TORONTO — The Canadian dollar edged

higher against its U.S. counterpart on Thursday, as oil prices

rose and comments from a senior Bank of Canada policymaker

supported expectations for further reduction of stimulus from

the central bank as soon as next month.

The loonie was trading 0.2% higher at 1.2090 to the

greenback, or 82.71 U.S. cents, after touching its weakest level

since last Friday at 1.2127.

The currency has been the top performing Group of 10

currency this year, gaining 5.3% against the greenback. It has

been bolstered by higher commodity prices and the Bank of

Canada’s more hawkish stance, including a reduction in the pace

of bond purchases.

BoC Deputy Governor Timothy Lane said that recent data show

signs of increasing resilience in the economy that bodes well

for the recovery.

“If all goes well, the next few weeks could set us up for

further tapering as soon as July,” said Sri Thanabalasingam, a

senior economist at TD Economics.

With COVID-19 vaccinations rolling out and new cases

tumbling, Canadian provinces are loosening economic


The price of oil, one of Canada’s major exports, rose to its

highest level since October 2018 after a drop in new U.S.

unemployment claims supported expectations for strong demand.

U.S. crude oil futures settled 0.5% higher at $70.29 a


The much-anticipated U.S. consumer price index report

signaled that the current inflation wave will be transitory,

weighing on the U.S. dollar and bond yields.

Canadian government yields eased across a flatter curve,

tracking the move in U.S. Treasuries. The 10-year

fell as much as 2.7 basis points to 1.384%, its lowest level

since March 11.

(Reporting by Fergal Smith

Editing by Paul Simao and David Gregorio)

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