Canadian dollar nears 3-year high as economic data boosts global shares

TORONTO: The Canadian dollar gained ground against its US counterpart on Wednesday as oil prices rose and economic data supported expectations for global economic recovery, with the loonie approaching its strongest level in over three years.

World shares advanced after data for April showing euro zone business activity quickened and US private payrolls climbed.

Canada is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the outlook for the global economy.

Oil prices rose for a third day as easing of lockdowns in the United States and parts of Europe heralded a boost in fuel demand in the summer season and offset concerns about the rise of COVID-19 infections in India and Japan.

US crude prices were up 1.1% at $66.44 a barrel, while the Canadian dollar was trading 0.3% higher at 1.2271 to the greenback, or 81.49 US cents.

The currency traded in a range of 1.2266 to 1.2314. Last Friday, it touched its strongest intraday level since February 2018 at 1.2262.

Home sales across Toronto, Canada's most populous city, fell nearly 13% in April from March. That bucked the regular spring trend, as demand began to ease after months of blistering growth.

The Bank of Canada has feared that high housing prices could result in stretched borrowing and lending, leaving some households and financial institutions vulnerable to an economic downtown.

Clues to the central bank's policy outlook could come from Canada's April employment report, which is due for release on Friday.

Canadian government bond yields were higher across the curve, with the 10-year up 2.5 basis points at 1.548%.