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The Canadian dollar on Wednesday strengthened against its U.S. counterpart and most other G10 currencies as the Federal Reserve announced new facilities that could support global financial conditions, while national data showed annual inflation easing in June.

The U.S. economic recovery remains on track despite a rise in coronavirus infections, the Fed said in a policy statement that flagged ongoing talks around the eventual withdrawal of monetary policy support.

In addition, the Fed announced it will establish separate domestic and international standing repo facilities to backstop money markets during times of stress.

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“This is fundamentally supportive of global financial conditions and helps to reduce tail risks for Canadian dollar bulls,” said Karl Schamotta, chief market strategist at Cambridge Global Payments.

Canada is a major exporter of commodities, including oil, so its economy is sensitive to global economic growth. Oil rose after data showed U.S. crude inventories fell more sharply than analysts had forecast.

U.S. crude oil futures settled 1% higher at $72.39 a barrel, while the Canadian dollar was trading 0.5% higher at 1.2532 to the greenback, or 79.80 U.S. cents. Among G10 currencies, only the Norwegian crown fared better.

Canada’s inflation rate slowed more than expected to 3.1% year-over-year in June from a decade-high in May, but some analysts said it might be only a brief reprieve.

The Bank of Canada’s pledge to let the economy run hot could be tested by inflation, with more price increases expected as businesses shuttered during the COVID-19 pandemic reopen and consumers dip into record savings.

Canadian government bond yields were higher across much of the curve, with the 5-year up 2.6 basis points at 0.802%.

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