Canadian dollar extends rebound from 5-month low

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The Canadian dollar strengthened against its U.S. counterpart on Monday, adding to its recovery from a five-month low, as an increase in risk appetite weighed on the safe-haven U.S. dollar.

The loonie was trading 0.4% higher at 1.3580 to the greenback, or 73.64 U.S. cents, after moving in a range of 1.3562 to 1.3639. On Thursday, the currency hit its weakest intraday level since March 28 at 1.3694.

“It has been a fairly quiet day activity-wise, with the rebound in U.S. equities lending some support to the risk backdrop, which has weighed on the USD more broadly,” said George Davis, chief technical strategist at RBC Capital Markets.

The U.S. dollar (.DXY) gave back some recent gains against a basket of major currencies and Wall Street rallied as investors awaited U.S. inflation data on Wednesday.

The price of oil , one of Canada’s major exports, settled down 0.3% at $87.29 a barrel but holding near 10-month highs following fresh Saudi and Russian crude output cuts.

The move higher for the loonie follows stronger-than-expected domestic jobs data on Friday that kept alive prospects of another interest rate hike by the Bank of Canada.

The central bank left its policy rate on hold last week at a 22-year high of 5% after hiking in June and July.

Canadian government bond yields rose across a steeper curve, tracking moves in U.S. Treasuries. The 10-year was up 2.1 basis points at 3.699%.

Reporting by Fergal Smith, editing by Deepa Babington – Reuters

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