TORONTO: The Canadian dollar edged higher against its US counterpart on Tuesday, recovering from its weakest level in nearly four weeks, as oil prices rose and US data showed a measure of underlying inflation climbing less than expected in March.

US core CPI increased by 6.5% in the 12 months through March, the largest advance since August 1982, but below the 6.6% rate that economists expected.

Investors have been bracing for the Federal Reserve and the Bank of Canada to move aggressively to tamp down inflation. Canada’s central bank is expected to raise interest rates by a half-percentage-point on Wednesday, its first hike of that magnitude since May 2020.

It could also move to shrink its bloated balance sheet, a process known as quantitative tightening.

The price of oil, one of Canada’s major exports, was up 3.9% at $97.94 a barrel, as Shanghai’s relaxation of some COVID-19 restrictions eased concerns about Chinese demand and OPEC said it would be impossible to replace potential supply losses from Russia.