TORONTO: The Canadian dollar strengthened to a nine-month high against its US counterpart on Tuesday, together with broader gains for commodity-linked currencies as oil rose and risk appetite grew.
Fellow commodity currencies, the Australian and New Zealand dollars, rose to 10-month highs against the greenback and US stock index futures advanced, drawing support from oil prices.
Oil gained as a strike by oil workers in Kuwait nearly halved crude production from the OPEC member, overshadowing bearish sentiment following Sunday's failure by producers to agree to freeze output levels.
US crude prices were up 0.55 percent to $40 a barrel.
At 9:25 a.m. EDT (1325 GMT), the Canadian dollar was trading at C$1.2712 to the greenback, or 78.67 US cents, stronger than Monday's official close of C$1.2797, or 78.14 US cents.
The currency's weakest level of the session was C$1.2798, while it touched its strongest since July 13 at C$1.2702.
The next important technical target for the currency is C$1.2675, according to a research note from Brown Brothers Harriman. That is roughly the 38 percent retracement of the US dollar's rally from 2011 through January this year.
Bank of Canada Governor Stephen Poloz and Senior Deputy Governor Carolyn Wilkins will appear before the House of Commons Standing Committee on Finance at 11:00 a.m. EDT (1500 GMT).
Last week, the central bank warned that the country's improving economy faced downside risks, including a stronger currency that could drag on non-commodity exports, although it held interest rates steady and raised growth forecasts.
The implied probability of a Bank of Canada interest rate hike this year has increased to more than 10 percent, data from overnight index swaps showed. At the start of March, the market had implied a more than 50 percent probability of a rate cut.
Canadian government bond prices were mixed across the maturity curve after data suggested some cooling in the US housing market.
The two-year price fell 0.5 Canadian cent to yield 0.603 percent and the benchmark 10-year was down 1 Canadian cent to yield 1.302 percent. The 10-year yield touched its highest since March 23 at 1.329 percent.
Commercial borrowing by small businesses in Canada cooled for the third month in a row as lower oil prices and weak domestic demand dampened business investment, data from PayNet showed.
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