The loonie was up 0.5% to 1.2420 for the greenback, or 80.52 US cents, after hitting its highest level since Nov. 10 at 1.2418.
The Canadian dollar strengthened as other commodity-linked currencies rose, including the Australian dollar, which rose 1.2% after the Reserve Bank of Australia backed off its promise to be “patient” on rising interest rates.
Canada’s exports rose 2.8% in February, mainly driven by energy products, while imports rose 3.9% mom. This left a slightly smaller trade surplus of CA$2.7 billion.
Oil prices, one of Canada’s top exports, rose 0.6% to $103.87 a barrel as the United States and Europe announced new sanctions to punish Russia over alleged war crimes in Ukraine, raising concerns over tight global supplies let arise.
Meanwhile, Canada’s Liberal Party government is in a difficult position ahead of this week’s budget: The economy has recovered from the pandemic, but Prime Minister Justin Trudeau has pledged billions of dollars in new stimulus measures, a political gamble that could exacerbate the flight Inflation.
With inflation at a 30-year high, money markets see a 70% chance that the Bank of Canada will hike interest rates by half a percentage point when it announces policy next week.
Canadian government bond yields rose along the curve, following the performance of US Treasuries. The 10-year bond rose 4 basis points to 2.476%.
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