The Canadian dollar edged lower against its broadly stronger U.S. counterpart on Wednesday, but held on to most of this week’s gains as oil prices rose and domestic data showed the value of building permits scaling a record high in January.
The loonie was trading 0.1 per cent lower at 1.2641 to the greenback, or 79.11 U.S. cents, having traded in a range of 1.2592 to 1.2657.
Since the start of the week, the currency has gained 0.8 per cent as calming in global bond markets bolstered risk appetite.
The U.S. dollar rose against a basket of major currencies after President Joe Biden said that the United States will have enough COVID-19 vaccine for every American adult by the end of May.
Canada sends about 75 per cent of its exports to the United States, including oil. U.S. crude prices were up 2.1 per cent at $61.01 a barrel, boosted by expectations that OPEC+ producers might decide against increasing output when they meet this week, while signs of progress in the U.S. vaccine rollout gave further support.
The value of Canadian building permits rose 8.2 per cent to $9.9 billion in January from December, surpassing the previous record set in April 2019 and led by gains in the residential sector, Statistics Canada said.
Canada’s economic growth in the fourth quarter was stronger than expected and it likely rose again in January, boosting speculation that the Bank of Canada will reduce its bond purchases soon.
The central bank is due to make an interest rate decision next Wednesday.
Canadian government bond yields were higher across a steeper curve in tandem with U.S. Treasury yields. The 10-year rose 7.6 basis points to 1.401 per cent but was trading well below Friday’s 13-month high at 1.501 per cent.
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