Canadian dollar edges higher as oil prices rise

The Canadian dollar edged higher against its US counterpart on Wednesday as oil rallied, helping the currency pare some recent losses that pushed it to a near two-week low earlier in the session.

Oil prices jumped about 6% on Wednesday after a ship ran aground in the Suez Canal, and worries that the incident could tie up crude shipments gave prices a boost after a slide over the past week.

Oil is one of Canada's major exports.

"Until the container ship that ran aground in the Suez Canal can be cleared, Mid-East oil exports will slow significantly, which will keep oil prices firm for the time being, and continue to weigh on USD-CAD," said Ronald Simpson, managing director, global currency analysis at Action Economics.

The Canadian dollar was trading up about 0.2% at 1.2562 to the greenback, or 79.61 US cents. The currency earlier touched its weakest level since March 11 at $1.2608.

Canadian manufacturing sales in February likely dropped 1.0% as spending on the transportation equipment industry declined, Statistics Canada said in a flash estimate.

The Bank of Canada is seeing evidence of investor activity in some Canadian housing markets and is concerned that "fear of missing out" may also be driving price gains, Deputy Governor Toni Gravelle told Reuters on Tuesday.

Canadian government bond yields were little changed across the curve, with the 10-year trading at about 1.482%, not far from the 14-month high of 1.677%. touched last Thursday.