The Canadian dollar edged higher against its U.S. counterpart on Tuesday, with the currency trading at nearly its strongest level since January as equity markets gained ground and operations were set to resume at Canada’s second-largest railroad.
Wall Street’s main indexes rose as bank shares gained on growing bets of aggressive interest rate increases by the Federal Reserve.
Investors have been betting that the Bank of Canada will keep pace with the Fed. Both central banks are expected to hike interest rates by about 190 basis points further this year after they hiked this month for the first time since before the pandemic.
Canadian Pacific Railway Ltd will resume operations on Tuesday as it agreed to settle a labor dispute with the union representing its conductors and engineers through arbitration, averting more pain to firms battling supply-chain disruptions.
The Canadian dollar was trading 0.1% higher at 1.2580 to the greenback, or 79.49 U.S. cents, after trading in a range of 1.2572 to 1.2623.
The currency was on track for its sixth day of gains, which would be the longest winning streak since March last year. On Monday, it touched its strongest intraday level since Jan. 26 at 1.2562.
The price of oil, one of Canada’s major exports gave back some of the previous day’s rally as investors weighed the potential for a European Union oil embargo on Russia.
U.S. crude prices were down 1.1% at $110.91 a barrel.
Canada is due on Tuesday to price its first issue of green bonds. The deal could help speed up investment in climate-friendly infrastructure projects.
Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year rate touched its highest level since November 2018 at 2.385%, up as much as 5.8 basis points on the day.
(Reporting by Fergal Smith; Editing by Andrea Ricci)
