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The Canadian dollar strengthened against its U.S. counterpart on Thursday, bolstered by a 3-1/2-year high for oil prices and as investors added to bets for a Bank of Canada interest rate hike next month.

Chances of a rate increase at the July 11 announcement have climbed to 65 per cent from less than 50 per cent before a news conference on Wednesday by Bank of Canada Governor Stephen Poloz that was more hawkish than a speech that had preceded it, data from the overnight index swaps market showed.

“I think people are still talking about the Poloz comments yesterday,” said Win Thin, global head of emerging markets strategy at Brown Brothers Harriman. “The price action speaks for itself, the Canadian dollar is stronger.”

The shifting perception of July rate hike chances whipsawed the Canadian dollar on Wednesday to a one-year low at $1.3386 before it recovered ground.

It was the second time in June that declines for the currency had run out of steam just ahead of the $1.34 threshold.

“This could be a technical correction too for the loonie,” Thin said.

Investors are likely to pay close attention to the Bank of Canada Business Outlook Survey and the April report for gross domestic product, both due on Friday, after Poloz said the bank is “data dependent, not headline dependent.”

The price of oil, one of Canada’s major exports, was boosted by supply concerns due to U.S. sanctions that could cause a large drop in crude exports from Iran.

U.S. crude oil futures settled nearly 1 per cent higher at $73.45 a barrel.

At 4 p.m. EDT, the Canadian dollar was trading 0.5 per cent higher at $1.3266 to the greenback, or 75.38 U.S. cents. The currency touched its strongest since June 19 at $1.3242.

Gains for the loonie came as stocks on Wall Street rose, shaking off recent worries about a trade dispute between the United States and China.

Canada has its own trade dispute with the United States and is in slow-moving talks to revamp the North American Free Trade Agreement.

It will offer an aid package worth between $500-million and $800-million to help steel and aluminum industries and workers who have been hit by U.S. tariffs, a source familiar with the matter said.

Canadian government bond prices were lower across the yield curve, with the 10-year falling 35 Canadian cents to yield 2.134 per cent.