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The Canadian dollar strengthened to its highest level in nearly six weeks against the greenback on Monday as investors weighed the prospects of the U.S. Federal Reserve maintaining its dovish stance at a policy meeting this week.

Most analysts expect Fed Chairman Jerome Powell to say on Wednesday that talk of withdrawing monetary easing is premature, which could put downward pressure on Treasury yields and the U.S. dollar .

In contrast, the Bank of Canada last week signaled it could start hiking interest rates next year and cut the pace of bond purchases.

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Investors in Canada are shunning interest-rate sensitive stocks, seeking inflation protection and betting on a steeper yield curve as the Bank of Canada leads global central banks in shifting to a more hawkish stance.

The Canadian dollar was trading 0.3 per cent higher at 1.2439 to the greenback, or 80.39 U.S. cents, having touched its strongest intraday level since March 18 at 1.2432.

Speculators have raised their bullish bets on the Canadian dollar to the highest in seven weeks, data from the U.S. Commodity Futures Trading Commission showed on Friday.

As of April 20, net long positions had increased to 13,246 contracts from 2,406 in the prior week.

The price of oil, one of Canada’s major exports, fell on fears that surging COVID-19 cases in India will dent fuel demand in the world’s third-biggest oil importer. U.S. crude prices were down 1.9 per cent at $60.95 a barrel.

Canadian government bond yields edged higher across the curve. The 10-year was up nearly one basis point at 1.526 per cent.

Canadian retail sales data for February is due on Wednesday, while GDP data for the same month is due on Friday.

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