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The Canadian dollar strengthened against its U.S. counterpart on Tuesday as the greenback broadly declined and domestic data showed the economy growing at a record pace in the third quarter.

Canada’s economy grew by 40.5 per cent on an annualized basis in the third quarter, rebounding from a historic plunge in the second quarter, as businesses and stores reopened from COVID-19 lockdowns, Statistics Canada said.

Separate data, from IHS Markit, showed that Canadian manufacturing activity expanded for the fifth straight month in November as output and new orders climbed.

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The U.S. dollar fell against a basket of major currencies on growing speculation that the Federal Reserve will act to support the economy through a tough winter as coronavirus cases rise.

Canada is also seeing a surge in infections. On Monday, Ottawa projected the budget deficit would hit a historic C$381.6 billion on COVID-19 emergency aid.

The Canadian dollar was trading 0.4 per cent higher at 1.2953 to the greenback, or 77.20 U.S. cents, having traded in a range of 1.2942 to 1.3006.

On Monday, the loonie notched its strongest intraday level in over two years at 1.2919. It ended November up 2.4 per cent.

The price of oil, one of Canada’s major exports, fell on Tuesday as investors awaited direction from OPEC and its allies after the producers postponed a formal meeting to decide whether to lift output from January. U.S. crude prices were down 0.8 per cent at $44.99 a barrel.

Canadian government bond yields were higher across a steeper curve in sympathy with U.S. Treasuries as Wall Street rallied. The 10-year was up 2.9 basis points at 0.709 per cent.

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