TORONTO: The Canadian dollar strengthened to a nearly one-week high against its US counterpart on Monday as oil rallied ahead of a meeting this week of major oil producers, while investors awaited a speech by Bank of Canada Governor Stephen Poloz.
Oil prices gained more than two percent in volatile trading, recouping earlier losses as the market reacted to the shaky prospect of the Organization of the Petroleum Exporting Countries being able to agree output cuts at a meeting on Wednesday.
US crude prices were up 2.45 percent at $47.19 a barrel. Oil is on of Canada's major exports.
At 9:19 a.m. EST (1419 GMT), the Canadian dollar was trading at C$1.3417 to the greenback, or 74.53 US cents, stronger than Friday's close of C$1.3527, or 73.93 US cents.
The currency's weakest level of the session was C$1.3537, while it touched its strongest since Nov. 22 at C$1.3404.
Poloz will give a speech at the C.D. Howe Institute in Toronto, followed by a press conference. The Bank of Canada will release his prepared remarks at 7:45 p.m. EST.
The governor of Canada's central bank is likely to be pressed on what the US election of Donald Trump means for Canada, particularly its export sector, which has long been key to the central bank's outlook.
The market is underestimating the prospect of further interest rate cuts from the Bank of Canada, some economists said, as an uncertain outlook for the NAFTA trade accord following the US election risks derailing an expected pick-up in Canada's business spending.
Canadian government bond prices were higher across the yield curve in sympathy with US Treasuries. The two-year rose 2.5 Canadian cents to yield 0.657 percent and the benchmark 10-year climbed 20 Canadian cents to yield 1.545 percent.
Last week, the 10-year yield touched an 11-month high at 1.614 percent.
Canada's gross domestic product data for the third quarter is due on Wednesday. Growth is expected to have accelerated by an annualized 3.4 percent, rebounding from a contraction in the second quarter that was caused by wildfires in Alberta.
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