The Canadian dollar strengthened to a more than five-week high against its U.S. counterpart on Tuesday, helped by a rise in oil prices on positive news about vaccine trials and a European Union stimulus deal as well as data showing a rebound in retail sales.
The Canadian dollar was at $1.3459 to the greenback, or 74.30 U.S. cents, stronger than Monday’s close of $1.3533, or 73.89 U.S. cents.
The loonie, which has been in a narrow range against the greenback for the last seven weeks, was at its strongest since June 11.
“Oil, and by association the Canadian dollar, and other oil-correlating currencies, have been boosted by a broader risk-on theme in global markets,” said Jonathan Coughtrey, managing director at Action Economics.
The price of oil, one of Canada’s major exports, rose on Tuesday, helped by positive news about vaccine trials and a European Union stimulus deal, which took prices to levels last seen when an oil price war erupted in early March between Russia and Saudi Arabia.
Canadian retail sales increased by a record 18.7 per cent in May from April to $41.79 billion, as higher sales at motor vehicle and parts dealers led the rebound, Statistics Canada said on Tuesday.
Sales increased in 10 of 11 subsectors. In volume terms, retail sales were up 17.8 per cent, following a record decline of 24.1 per cent in April.
Canadian government bond prices were mixed across the maturity curve. The two-year yield was flat on the day at 0.27 per cent., while the benchmark Canadian 10-year yield slipped to 0.503 per cent from Monday’s 0.514 per cent.
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