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The Canadian dollar edged higher against its broadly stronger U.S. counterpart on Friday, clawing back its earlier decline as oil prices climbed and data showed Canada’s first trade surplus since May 2019.

Canada posted a surprise trade surplus of $1.4 billion in January, mostly on a sharp increase in exports, Statistics Canada said. Analysts had predicted a $1.4 billion deficit.

The U.S. dollar rose to its highest since November against a basket of major currencies after data showed the United States added more jobs than expected in February and Federal Reserve Chair Jerome Powell expressed no concern about a sell-off in bonds.

The price of oil, one of Canada’s major exports, jumped after OPEC and its allies agreed not to increase supply in April as they await a more substantial recovery in demand. U.S. crude prices were up 2.7 per cent at $65.55 a barrel.

The Canadian dollar was trading 0.1 per cent higher at 1.2653 to the greenback, or 79.03 U.S. cents, having traded in a range of 1.2651 to 1.2737. For the week, the loonie was on track to gain 0.7 per cent.

The Bank of Canada’s next policy move will be to taper its asset purchase program following a solid economic rebound and sustained growth later this year, a majority of economists in a Reuters Poll forecast.

The central bank is due to make an interest rate decision on Wednesday.

Canadian government bond yields were higher across the curve in sympathy with U.S. Treasuries. The 10-year touched its highest since January last year at 1.544 per cent before dipping to 1.523 per cent, up 1.5 basis points on the day.

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