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The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rebounded and domestic data showed manufacturing activity expanding at a still-robust pace in November in spite of supply bottlenecks.

The loonie was trading 0.4 per cent higher at 1.2720 to the greenback, or 78.62 U.S. cents, after trading in a range of 1.2713 to 1.2786. On Tuesday, it touched a 10-week low at 1.2837.

The price of oil, one of Canada’s major exports, rallied as major producers started to discuss future output against the backdrop of the new, possibly vaccine-resistant Omicron variant triggering fresh travel restrictions which could dampen demand.

U.S. crude oil futures were up 3 per cent at $68.18 a barrel, while Wall Street also gained ground, recovering from a sharp sell-off triggered by concerns over rising inflation as well as the new variant.

The IHS Markit Canada Manufacturing Purchasing Managers’ Index (PMI) dipped to a seasonally adjusted 57.2 in November from 57.7 in October, but staying well above the 50 threshold that marks growth in the sector.

Separate data showed that the value of Canadian building permits rose by 1.3 per cent in October from September, beating expectations.

Canada’s jobs report for November is due on Friday, which could provide further clues on the strength of the domestic economy.

Canadian government bond yields were higher across the curve. The 10-year rate rose 1.3 basis points to 1.579 per cent, after hitting on Tuesday its lowest intraday level since Oct. 7 at 1.503 per cent.

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