TORONTO: The Canadian dollar rose against its U.S. counterpart on Wednesday as oil prices rose and domestic data showed record highs for exports and imports, but gains for the currency were capped ahead of a Federal Reserve interest rate decision.
The loonie was up 0.1% at 1.2826 to the greenback, or 77.97 U.S. cents, after trading in a range of 1.2805 to 1.2847.
Canada’s trade surplus with the world narrowed to C$2.5 billion in March from February as both imports and exports came in higher than analysts had forecast, data from Statistics Canada showed.
The price of oil, one of Canada’s major exports, jumped as the European Union spelled out plans to phase out imports of Russian oil, offsetting demand worries in top importer China.
Canadian dollar hits 4-month low
U.S. crude prices were up 4.3% at $106.84 a barrel, while the U.S. dollar index pulled further away from 20-year highs against a basket of major currencies.
The market has already priced in a half-percentage-point rate increase by the Fed later in the day and some 250 basis points by year-end.
Canada’s most populous province, Ontario, will hold an election next month with incumbent Progressive Conservative leader Doug Ford favored in polls and the campaign expected to focus on fighting inflation.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.
The 10-year touched its highest level since July 2011 at 2.996% before dipping to 2.988%, up 3.1 basis points on the day.
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