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The Canadian dollar climbed to its highest in more than five months against its broadly weaker U.S. counterpart on Wednesday as oil prices rose, but some gains for the loonie were given back after domestic data showing a wider trade deficit.

The loonie was trading 0.3% higher at 1.3280 to the greenback, or 75.30 U.S. cents. The currency touched its strongest intraday level since Feb. 21 at 1.3230.

“Oil prices, along with the direction of the greenback will continue to influence the CAD going forward,” analysts at Action Economics, including Ron Simpson, said in web-based commentary.

The price of oil, one of Canada’s major exports, rose to its highest since early March after a large decline in U.S. crude inventories. 

U.S. crude oil futures settled 1.2% higher at $42.19 a barrel, while the U.S. dollar extended its recent decline against a basket of major currencies as investors’ appetite for risk improved on strong corporate earnings and expectations of more stimulus measures for the pandemic-ravaged global economy. 

Canada’s trade deficit unexpectedly ballooned to C$3.19 billion in June on a surge in motor vehicle and parts imports as the economy started to reopen, Statistics Canada data indicated. Analysts had forecast a deficit of C$0.90 billion. 

Canadian government bond yields were higher across a steeper curve, with the 10-year up 6.2 basis points at 0.497%. Last Friday, it hit its lowest intraday level in nearly five months at 0.412%.

Canada’s employment report for July is due on Friday. It could offer additional evidence of economic recovery after nearly 1 million jobs were added in June.

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