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The Canadian dollar edged lower against its U.S. counterpart on Monday as rising global bond yields weighed on risk appetite, with the loonie pulling back from its strongest level in nearly three years, hit earlier in the session.

World shares fell as expectations for faster economic growth and inflation battered bonds and boosted commodities, while rising real yields made equity valuations look more stretched in comparison.

Canada runs a current account deficit so the loonie tends to be sensitive to risk appetite.

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The Canadian dollar was trading 0.1% lower at 1.2625 to the greenback, or 79.21 U.S. cents. It touched its strongest intraday level since April 2018 at 1.2580.

The price of oil, one of Canada’s major exports, rose as the slow return of U.S. crude output cut by frigid conditions served as a reminder of the tight supply situation. U.S. crude prices were up 1.5% at $60.12 a barrel.

Speculators have cut their bullish bets on the Canadian dollar for the second straight week, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Feb. 16, net long positions had dipped to 8,164 contracts from 9,528 in the prior week.

Bank of Canada Governor Tiff Macklem is due to speak on Tuesday on the impact of the coronavirus crisis on the labor market.

On Friday, Canadian health officials said tough public measures should be maintained to prevent new variants of COVID-19 from triggering a third wave of infections, just as some of the major provinces are relaxing restrictions.

Canadian government bond yields were higher across the curve on Monday in sympathy with U.S. Treasuries. The 10-year

touched its highest since February last year at 1.256% before pulling back to 1.225%, up 1.2 basis points on the day.

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