TORONTO: The Canadian dollar strengthened to a nearly five-month high against its US counterpart on Thursday as expectations for Federal Reserve rate hikes were scaled back and the oil market rally extended further.
The US dollar tumbled against a basket of major currencies after the Federal Reserve said on Wednesday it now expects just two quarter-point rate hikes this year, not four.
Oil prices rose, bolstered by a plan among some of the world's biggest producers to meet next month to discuss supporting the market.
US crude prices were up 2.47 percent to $39.41 a barrel.
At 9:14 a.m. EDT (1314 GMT), the Canadian dollar was trading at C$1.3000 to the greenback, or 76.92 US cents, stronger than Wednesday's close of C$1.3122, or 76.21 US cents.
The currency's weakest level of the session was C$1.3133, while it touched its strongest since Oct. 20 at C$1.2946.
The value of Canadian wholesale trade remained unchanged in January from December, data from Statistics Canada showed. The reading was slightly below expectations for a 0.2 percent increase after a revised 1.8 percent gain in December.
However, it follows Canadian manufacturing data on Wednesday which showed strength that caught the market's attention.
Canadian government bond prices were slightly higher across the maturity curve in sympathy with US Treasuries.
The two-year price rose 0.5 Canadian cent to yield 0.532 percent and the benchmark 10-year was up 5 Canadian cents to yield 1.295 percent.
The Canada-US two-year bond spread was 1 basis point less negative at -32.7 basis points, while the 10-year spread was 3.3 basis points less negative at -60.4 basis points as Treasuries outperformed.
Quebec Finance Minister Carlos Leitao will present the province's 2016-17 budget this afternoon, which is expected to be balanced.
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