Loonie gains as oil climbs to highest since October

TORONTO: The Canadian dollar strengthened against its US counterpart on Monday as oil prices jumped to fresh multi-month highs, while investors awaited an interest rate decision this week from the Bank of Canada.

At 9:39 a.m. (1339 GMT), the Canadian dollar was trading 0.2% higher at 1.3365 to the greenback, or 74.82 US cents. The currency, which fell 0.5% last week, traded in a range of 1.3355 to 1.3389.

The price of oil, one of Canada's major exports, rose to its highest since October as the United States was set to announce a further clampdown on Iranian oil exports, tightening global supplies. US crude oil futures were up 2.4% at $65.55 a barrel.

The Bank of Canada is expected to hold its benchmark interest rate steady at 1.75% on Wednesday and for the rest of this year, with calls for the next hike in early 2020 resting on a knife's edge, a Reuters poll showed, the latest dulling of rate expectations for a major central bank.

Last week, domestic data showing higher retail sales and a pick-up in underlying inflation was offset by a Bank of Canada survey showing softer business sentiment. The decline in sentiment was due partly to a more uncertain outlook in the Western Canadian energy sector.

Canada has extended the deadline for a decision on whether to push forward with the expansion of the Trans Mountain oil pipeline to June 18 from mid-May, the government said on Thursday.

Canadian government bond prices were mixed across a steeper yield curve, with the two-year up 2 Canadian cents to yield 1.615% and the 10-year falling 8.5 Canadian cents to yield 1.775%.

Canada's wholesale trade report for February is due on Tuesday.