TORONTO: The Canadian dollar strengthened against its US counterpart on Monday as the recent selloff in risk-sensitive assets paused and ahead of domestic data this week that could show inflation climbing to a new multi-decade high.

Stock markets chalked up modest gains after last week’s hefty losses as investors braced for a host of US Federal Reserve speakers this week, where they could underline a commitment to fight inflation whatever rate pain required.

Wall Street was closed on Monday for the Juneteenth holiday.

The risk of inflation becoming entrenched in Canada’s economy is growing, say analysts, as surging prices for gas and other highly visible consumer items undercut efforts by the Bank of Canada to keep expectations for price increases in check.

Canada’s consumer price index data for May, due on Wednesday, is expected to show inflation climbing to 7.4%, eclipsing April’s three-decade-high of 6.8%.

US Treasury Secretary Janet Yellen will meet with Canadian Finance Minister Chrystia Freeland in Toronto on Monday where they will discuss the Ukraine war and joint efforts to deal with the food and fuel price inflation it is causing.

The Canadian dollar was trading 0.2% higher at 1.3006 to the greenback, or 76.89 US cents, after trading in a range of 1.2986 to 1.3038. On Friday, it touched its weakest since November 2020 at 1.3078. The price of oil, one of Canada’s major exports, was struggling to reverse last week’s losses as the market balanced tightening supplies with concerns about slowing global economic growth.

US crude prices were up 0.1% at $109.69 a barrel, while the US dollar edged lower against a basket of major currencies.

Canadian government bond yields were higher across the curve, with the 10-year up 2.1 basis points at 3.429%. Last Thursday, it touched its highest in 12 years at 3.664%.