The Canadian dollar CADUSD edged higher against its U.S. counterpart on Monday, recovering from an earlier 10-day low, as escalating concern that Russia would invade Ukraine bolstered oil prices.
The loonie was trading 0.1% higher at 1.2725 to the greenback, or 78.59 U.S. cents, after touching its weakest intraday level since Feb. 4 at 1.2783. It was the only G10 currency to gain ground against the greenback.
“In many ways Canada and Russia are mirrors of one other in terms of commodity exports,” said Adam Button, chief currency analyst at ForexLive. “If Russia is cut off from the global market in any way, Canada will be called on to fill the gap.”
Canada is a major producer of oil, which climbed to a seven-year high after the United States said that Russia could invade Ukraine at any time.
U.S. crude oil futures settled 2.5% higher at $95.46 a barrel, while the safe-haven U.S. dollar advanced against a basket of major currencies.
Also helping the greenback, St. Louis Federal Reserve President James Bullard reiterated calls for a faster pace of Fed interest rate hikes.
Meanwhile, sources said that Canadian Prime Minister Justin Trudeau plans to invoke rarely used special measures allowing him to tackle protests that have shut some border crossings and paralyzed downtown Ottawa.
Canada’s inflation report for January, due on Wednesday, could offer clues on the outlook for Bank of Canada interest rate hikes. Money markets expect the central bank to tighten next month for the first time since October 2018.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.
The 10-year was up 3.3 basis points at 1.904%, after touching on Friday its highest intraday level in nearly three years at 1.961%.
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