TORONTO/OTTAWA: The Canadian dollar strengthened against the greenback to its highest level of the week on Wednesday as energy prices rallied and investors consolidated after a recent rapid decline.
Oil jumped after US crude inventories unexpectedly fell for the first time since March. US crude prices ended up $1.57 at $46.23 a barrel.
The gains in oil helped the commodity-sensitive currency rise for the second day in a row after tumbling at the start of the month. Still, that decline gave back only a small part of the about 14 percent gain it made between late January and the end of April.
In a quiet week for domestic data and without any other major catalysts, the Canadian dollar will likely stick to a well-worn range of C$1.28 to C$1.3050, said Don Mikolich, executive director of foreign exchange sales at CIBC Capital Markets.
"In US dollar-Canadian dollar, it felt we had exhausted the move to the top side until we see further data," said Mikolich.
The Canadian dollar ended the North American trading session at C$1.2851 to the greenback, or 77.81 US cents, stronger than Tuesday's close of C$1.2916, or 77.42 US cents.
The currency touched a high of C$1.2829, its highest since May 5.
Attention was also shifting to restarting production in Alberta's oil sands. Workers for one of the largest oil sands companies affected by the wildfire will begin returning to facilities on Thursday, the latest sign that production was slowly coming back online.
Roughly 1 million barrels per day of output has been lost to the fire, about half of the oil sands' usual daily production.
The loss of production has weighed on Canada's economic outlook. Economists say second-quarter growth may slow to a standstill, leaving the central bank on hold.
Gains for the loonie came as Canada's InnVest Real Estate Investment said that it has entered into an agreement to be bought by Bluesky Hotels and Resorts in a transaction that values InnVest at $2.1 billion, including debt.
Canadian government bond prices were mixed across the maturity curve, with the two-year price off 1.5 Canadian cents to yield 0.537 percent and the benchmark 10-year up 18 Canadian cents to yield 1.297 percent.
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