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Canadian dollar adds to last week's rally as oil climbs

Credit: REUTERS/Thomas White

The Canadian dollar strengthened to its highest in nearly six weeks against its U.S. counterpart on Monday, supported by higher oil prices and lowered expectations for a Bank of Canada interest rate cut this year.

* Loonie posts a near six-week high at 1.3150 per U.S. dollar

* Price of U.S. oil increases 0.8%

* Chances of a BoC rate cut this year fall to less than 40%

* Canada's 10-year yield touches a two-week high at 1.328%

TORONTO, Sept 9 (Reuters) - The Canadian dollar strengthened to its highest in nearly six weeks against its U.S. counterpart on Monday, supported by higher oil prices and lowered expectations for a Bank of Canada interest rate cut this year.

At 8:56 a.m. (1256 GMT), the Canadian dollar was trading 0.1% higher at 1.3151 to the greenback, or 76.04 U.S. cents. The currency, which last week snapped a seven-week losing streak, touched its strongest intraday level since July 31 at 1.3150.

Gains for the loonie on Monday came as stocks were boosted by hopes of stimulus from the world's central banks to support slowing growth.

Canada exports many commodities including oil, so its economy could benefit from an improved outlook for the global economy.

Oil prices rose after the new Saudi Arabian energy minister, Prince Abdulaziz bin Salman, confirmed expectations that there would be no radical change in his country's oil policy. U.S. crude oil futures were up 0.8% at $56.97 a barrel.

Meanwhile, chances that the Bank of Canada will ease by December have fallen to less than 40% from about 50% before domestic data on Friday showing a bigger-than-expected jobs gain in August.

The central bank last week left its benchmark interest rate unchanged at 1.75% and made no mention of future moves despite easing this year by many of its global peers, including the U.S. Federal Reserve.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries. The two-year fell 5 Canadian cents to yield 1.516% and the 10-year was down 27 Canadian cents to yield 1.310%.

The 10-year yield touched its highest intraday since Aug. 23 at 1.328%. (Reporting by Fergal Smith; Editing by Andrea Ricci) ((fergal.smith@thomsonreuters.com; +1 416 941 8113;)) Keywords: CANADA FOREX/

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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