TORONTO: The Canadian dollar strengthened to a six-day high against its US counterpart on Tuesday despite a drop in oil prices and soft domestic data, while attention turned to a speech by Federal Reserve Chair Janet Yellen.
The currency extended its recovery from its weakest level last week at C$1.3296. Still, it is 1.9 percent weaker than on March 18, which it reached its strongest level in nearly five-months at C$1.2924.
Investors will look to Yellen for clues to the interest rate outlook after weaker-than-expected US consumer spending data on Monday prompted analysts to suggest the US central bank would be cautious about raising interest rates this year.
Oil prices fell, reflecting growing concerns that a two-month rally might be in danger of fizzling, while analysts forecast another rise to record levels for US crude stockpiles.
US crude prices were down 2.69 percent at $38.33 a barrel.
At 9:26 a.m. EDT (1326 GMT), the Canadian dollar was trading at C$1.3172 to the greenback, or 75.92 US cents, slightly stronger than Monday's close of C$1.3181, or 75.87 US cents.
The currency hit its weakest level of the session at C$1.3216, while it touched its strongest since March 23 at C$1.3152.
Canadian producer prices took their largest drop in more than a year in February, pulled down by cheaper energy and petroleum products as well as lower prices for vehicles, data from Statistics Canada showed.
However, January gross domestic product data due on Thursday is the major domestic economic report awaited this week. Analysts expect 0.3 percent growth for the month, which would reinforce expectations that first-quarter growth will exceed the Bank of Canada's forecast of 1 percent.
Canadian government bond prices were higher across the maturity curve, in sympathy with US Treasuries.
The two-year price rose 2.5 Canadian cents to yield 0.552 percent, and the benchmark 10-year was up 16 Canadian cents to yield 1.237 percent.
Earlier, the 10-year yield touched its lowest in nearly three weeks at 1.221 percent.
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