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The Canadian dollar edged higher against its U.S. counterpart on Tuesday, reversing an early decline as oil prices rose and Federal Reserve Chairman Jerome Powell signalled patience on raising interest rates further.

The U.S. dollar fell to a three-week low in choppy trading as Powell repeated that the U.S. central bank would remain patient on monetary policy, suggesting that it was unlikely to raise interest rates any time soon.

“The greenback is down across the board,” said Ronald Simpson, managing director, global currency analysis at Action Economics. “Oil prices recovered some (ground), so that helps the loonie as well.”

U.S. crude oil futures settled 2 cents higher at $55.50 a barrel on signs that OPEC plans to maintain production cuts despite pressure from U.S. President Donald Trump, whose comment criticizing rising crude prices sent the market into a tailspin a day earlier.

Oil is one of Canada’s major exports.

At 3:08 p.m., the Canadian dollar was trading 0.2 per cent higher at 1.3164 to the greenback, or 75.96 U.S. cents. The currency, which on Monday reached its strongest level in nearly three weeks at 1.3113, traded in a range of 1.3163 to 1.3236.

Data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed that speculators cut their bearish bets on the Canadian dollar. As of Feb. 12, net short positions had fallen to 37,537 contracts from 42,037 in the prior week.

Over coming days, Canadian markets will watch domestic economic data that could guide expectations for next week’s interest rate decision by the Bank of Canada.

Canada’s inflation report for January is due on Wednesday and fourth-quarter gross domestic product data is due on Friday.

Canadian government bond prices were higher across the yield curve in sympathy with U.S. Treasuries. The two-year rose 4.5 cents to yield 1.759 per cent and the 10-year climbed 23 cents to yield 1.868 per cent.

A Bank of Canada working group proposes expanding the range of transactions used in the calculation of the Canadian Overnight Repo Rate Average (CORRA) interest-rate benchmark, according to a consultation paper published by the central bank.

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