The loonie was trading up 0.2% at 1.2475 per greenback, or 80.16 US cents, after hitting its highest level since Nov. 10 at 1.2430. Since the beginning of March, the currency has gained 1.6%.
“We are seeing some end-of-month and end-of-quarter flows that are generally positive for the loonie,” said Rahim Madhavji, president of KnightsbridgeFX.com. “Other than that, we’ve seen a bit more strength in the oil markets.”
The price of oil, one of Canada’s top exports, stood at $107.82 a barrel, up 3.4%, as a further reduction in crude inventories in the United States indicated a limited offer. In addition, investors worried about new Western sanctions against Moscow as Russian forces continued to shell the outskirts of the Ukrainian capital.
Still, the safe-haven US dollar fell to its lowest level in nearly two weeks as data showing German annual inflation hit its highest level in more than 40 years in March supported the euro.
Canadian inflation also climbed to a multi-decade high, leading the Bank of Canada to adopt a more hawkish stance. Investors are betting that the central bank will begin to raise its key interest rate in half-percentage-point increments, with the first of these rarely used upward moves possibly as early as next month.
Yields on Canadian government bonds eased on a flatter curve, following the move in US Treasuries. The 10-year yield fell 4.2 basis points to 2.440%, after hitting its highest intraday level since October 2018 at 2.607% on Tuesday.