Canadian dollar nears recent 6-year high as oil climbs

TORONTO: The Canadian dollar strengthened against its US counterpart on Monday as oil prices rose and the greenback broadly declined, with the currency approaching the six-year high it notched last week.

The loonie was trading 0.3% higher at 1.2060 to the greenback, or 82.92 US cents. Last Wednesday, it touched its strongest level since 2015 at 1.2042.

"The Canadian dollar remains strong, helped by buoyant oil prices and a generally softer US dollar," said Erik Nelson, a currency strategist at Wells Fargo in New York.

The US dollar fell against a basket of major currencies, while the price of oil, one of Canada's major exports, settled 1.4% higher at $66.27 a barrel.

It was lifted by European economic reopenings and rising US demand after prices fell earlier due to surging coronavirus cases in Asia and underwhelming Chinese manufacturing data.

Canadian home sales, prices and starts all fell in April compared with the previous month, as some of the frenzy of recent months began to unwind, although activity remains strong, data showed.

Canada's inflation report for April is due on Wednesday, which could offer clues on the Bank of Canada policy outlook.

If the Canadian dollar continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy, BoC Governor Tiff Macklem said last Thursday.

Canadian government bond yields edged higher across a steeper curve.

The 10-year was up 1.2 basis points at 1.575%.