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The Canadian dollar rose on Monday to a near eight-month high against its U.S. counterpart and posted its largest monthly gain since June 2019, as signs of domestic economic recovery and improvement in investor risk appetite supported the currency.

The loonie was trading 0.5 per cent higher at 1.3035 to the greenback, or 76.72 U.S. cents. The currency touched its strongest intraday level since Jan. 8 at 1.3016.

For the month, the loonie was up 2.9 per cent. Among G10 currencies, it was bettered only by the Norwegian crown and the Australian dollar.

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Canada, Norway and Australia are major producers of commodities, so their currencies tend to benefit from an improved outlook for the global flow of trade and capital.

“There hasn’t been any wobbles in equity markets and I think that’s what’s going to dislodge this attraction to risk assets, risk currencies, like the Aussie (Australian) dollar and the Canadian dollar,” said Amo Sahota, director at Klarity FX in San Francisco.

It was the fifth straight month the loonie has gained ground, which is its longest winning streak since 2014. It is due in large measure to broad-based pressure on the U.S. dollar after a Federal Reserve policy shift on inflation.

The loonie has also benefited from signs of a sharp rebound in Canada’s economy after it was pummeled by the coronavirus crisis.

“I do think the Canadian labour market recovery is occurring at a faster pace than the U.S. labour market recovery,” Sahota said.

Canadian and U.S. employment data for August is due on Friday.

U.S. crude oil futures settled 0.8 per cent lower at $42.61 a barrel as demand uncertainty weighed.

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Canadian government bond yields were little changed across the curve. The 10-year steadied around 0.635 per cent, after having touched on Friday its highest intraday level in nearly three months at 0.697 per cent.

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