Loonie notches a 3-year high as Canada's bond yields jump

TORONTO: The Canadian dollar strengthened for a third straight day to notch a three-year high against the greenback on Thursday, as the US dollar broadly fell and Canada's bond yields rose at a faster pace than their US counterparts.

The loonie was trading 0.2% higher at 1.2486 to the greenback, or 80.09 US cents, having touched its strongest intraday level since February 2018 at 1.2468.

The US dollar dropped against a basket of major currencies as currency markets were boosted by dovish signals from the US Federal Reserve.

On Tuesday, Bank of Canada Governor Tiff Macklem said Canada's economy will see a solid and sustained rebound this year as COVID-19 inoculations ramp up. Some analysts expect the central bank to reduce its bond purchases as early as April.

Canadian government bond yields were higher across a steeper curve. The 10-year touched its highest level since January last year at 1.481% before dipping to 1.471%, up 15.6 basis points on the day.

It was trading 2.2 basis points above the US 10-year yield, having moved above that rate for the first time since April last year.

The price of oil, one of Canada's major exports, consolidated its recent gains. US crude prices were down 0.9% at $62.66 a barrel.

Canadian payroll employment rose by 44,200 in December after decreasing by 64,500 in November, Statistics Canada said.