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)