The Canadian dollar climbed to a six-year high against its U.S. counterpart on Tuesday as the greenback broadly declined and investors awaited inflation data on Wednesday that could offer clues on the Bank of Canada policy outlook.
The loonie was trading 0.3 per cent higher at 1.2028 to the greenback, or 83.14 U.S. cents, having touched its strongest level since May 2015 at 1.2013.
The currency has been on a tear since the Bank of Canada in April shifted to more hawkish guidance on its interest rate outlook and cut the pace of bond purchases. It has also been supported by soaring prices for many of the commodities that Canada produces.
Most industrial metals prices rose on Tuesday as investors betting on a long period of low interest rates bought riskier assets, pushing global stock markets higher and dragging the U.S. dollar to its weakest since February.
U.S. crude prices touched the highest since March at $67.01 a barrel before dipping to $66.14, down 0.2 per cent on the day.
Economists expect Canadian data due on Wednesday to show inflation climbing to 3.2 per cent year-over-year in April from 2.2 per cent in March. That would be above the Bank of Canada’s target range of 1 per cent to 3 per cent.
U.S. Trade Representative Katherine Tai discussed a range of trade issues with Canadian Trade Minister Mary Ng on Monday and emphasized the need for Canada to implement new North American trade deal commitments on dairy and e-commerce shipments, her office said in a statement.
Canadian government bond yields were lower across a flatter curve, with the 10-year down 1.6 basis points at 1.563 per cent.
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