The Canadian dollar on Wednesday strengthened for a second day against the greenback, as oil prices rose and investors weighed the impact of U.S. inflation data on the Federal Reserve‘s policy outlook.

The loonie was trading 0.1% higher at 1.2507 to the greenback, or 79.96 U.S. cents, after trading in a range of 1.2488 to 1.2548.

On Tuesday, the currency touched its weakest intraday level in nearly two weeks at 1.2589, but then rallied as oil, one of Canada‘s major exports, clawed back some recent losses.

The Canadian dollar is “strengthening in response to higher oil prices over the past several days,” said Eric Theoret, global macro strategist at Manulife Investment Management.

“The CAD is also seeing added strength from renewed weakness in the broader USD following this morning’s better than feared U.S. CPI release.”

U.S. crude oil futures on Wednesday settled 1.4% higher at $69.25 a barrel, changing course after the Biden administration said it would not call on U.S. producers to increase crude output and that efforts to increase OPEC production were a longer-range plan.

The U.S. dollar fell against a basket of major currencies after data showed U.S. consumer price increases slowing in July.

Still, inflation overall remained historically high amid continued supply-chain disruptions and stronger demand for travel-related services as economic activity rebounded.

The Fed is paying close attention to price pressures as it mulls when to begin reducing its massive bond holdings. A signal on the timing could come at a meeting of central bankers in Jackson Hole, Wyoming, on Aug. 26-28.

Canadian government bond yields eased across much of the curve. The 10-year dipped about half a basis point to 1.265%, after earlier touching its highest since July 15 at 1.295%.

(Reporting by Fergal Smith; Editing by Anil D’Silva and Marguerita Choy)