Article Highlights

  • Canadian dollar at C$1.3295, or 75.22 U.S. cents
  • Chance of Bank of Canada July rate hike rises to 65 pct
  • Bond prices lower across much of a flatter yield curve
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The Canadian dollar strengthened against its U.S. counterpart on Thursday, supported by a recent increase in oil prices and as investors added to bets for a Bank of Canada interest rate hike next month.

At 9:27 a.m. EDT (1327 GMT), the Canadian dollar was trading 0.3 percent higher at C$1.3295 to the greenback, or 75.22 U.S. cents. The currency traded in a range of C$1.3275 to C$1.3351.

On Wednesday, a dovish speech and a hawkish news conference from Bank of Canada Governor Stephen Poloz whipsawed the Canadian dollar to a one-year low at C$1.3386 before it recovered ground.

Chances of a rate increase at the July 11 announcement have increased to 65 percent from 55 percent before the central bank governor’s speech, data from the overnight index swaps market showed.

Investors are likely to pay close attention to the Bank of Canada Business Outlook Survey and the April report for gross domestic product, both due on Friday, after Poloz reiterated the central bank’s data dependence.

The price of oil, one of Canada’s major exports, steadied near a 3-1/2-year high, but supply remained tight with investors concerned by the prospect of a big fall in crude exports from Iran due to U.S. sanctions.

U.S. crude oil futures were little changed at $72.73 a barrel.

Pressure on world shares from a U.S.-driven trade dispute mounted, as a fast-charging dollar and a jump in oil prices also cranked up the pain in emerging markets.

Canada runs a current account deficit so its economy could be hurt if the flow of trade or capital slows.

The country also has its own trade dispute with the United States and is in slow-moving talks to revamp the North American Free Trade Agreement.

Canadian government bond prices were lower across much of a flatter yield curve, with the 10-year falling 7 Canadian cents to yield 2.099 percent.

On Wednesday, the 10-year yield touched its lowest intraday since Jan. 4 at 2.056 percent.