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The Canadian dollar CADUSD strengthened against its U.S. counterpart on Tuesday as oil prices rose and investors awaited further clues on the pace of expected U.S. interest rate hikes.

Global stocks recovered some of their recent losses as investors bought back into riskier assets ahead of the appearance of U.S. Federal Reserve Chair Jerome Powell before the Senate Banking Committee.

The prospect of faster-than-expected Fed tightening has weighed on stocks over the past week.

The price of oil, one of Canada’s major exports, was supported by tight supply and hopes that rising coronavirus cases and the spread of the Omicron variant will not derail a global demand recovery.

U.S. crude oil futures rose 1.5 per cent to $79.37 a barrel, while the Canadian dollar was trading 0.3 per cent higher at 1.2642 to the greenback, or 79.10 U.S. cents. The currency traded in a range of 1.2630 to 1.2682.

The U.S. Centers for Disease Control and Prevention (CDC) and U.S. State Department have advised against travel to Canada because of a rising number of COVID-19 cases as the Omicron variant spreads.

This month, Canada broke its one-day record for the highest number of people hospitalized with COVID-19.

Canadian government bond yields edged higher across the curve. The 10-year was up 1 basis points at 1.728 per cent, after touching on Monday its highest intraday level since Nov. 26 at 1.753 per cent.

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