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The Canadian dollar strengthened against its U.S. counterpart on Wednesday, recovering from an earlier six-day low as oil prices rose and investors grew more optimistic that the United States would remove metals tariffs on Canada.

The United States is close to resolving a dispute over steel and aluminum tariffs with Canada and Mexico, U.S. Treasury Secretary Steven Mnuchin said as high-level American and Canadian officials met to discuss trade issues.

“It is good for the Canadian dollar because it allows firms to have greater confidence in cross-border supply channels,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

It shows that even if a new trade agreement between the United States, Mexico and Canada does not get ratified that “the U.S. and Canada will trade on friendlier terms,” Anderson added.

Canada sends about 75% of its exports to the United States, including oil. Oil prices rose as worries that rising tensions in the Middle East could hit global supplies overshadowed an unexpected build in U.S. crude inventories.

U.S. crude oil futures settled 0.4% higher at $62.02 a barrel, while stocks on Wall Street climbed as reports that U.S. President Donald Trump would hold off on imposing tariffs on imported cars and parts eased growth concerns, even as U.S. and Chinese economic data disappointed investors.

At 4:21 p.m. (2021 GMT), the Canadian dollar was trading 0.2% higher at 1.3441 to the greenback, or 74.40 U.S. cents. Earlier in the day the currency touched its weakest since May 9 at 1.3493.

Domestic data for April showed that home sales rose 3.6% from the previous month and that the annual inflation rate edged up to the Bank of Canada’s target of 2.0% from 1.9% in March.

“We got a little reminder with the inflation data that probably the Bank of Canada is not going to cut (interest rates),” Anderson said.

Chances of an easing this year were little changed on Wednesday at less than 40%, the overnight index swaps market indicated.

Canadian government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The two-year rose 4 Canadian cents to yield 1.583% and the 10-year climbed 28 Canadian cents to yield 1.663%.

The 10-year yield touched its lowest intraday since April 1 at 1.633%.

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