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The Canadian dollar rallied to its highest level in nearly a week against a broadly weaker greenback on Tuesday, as oil prices rose and investors bet on a breakthrough in trade talks between the United States and China.

Optimism that a new round of talks between China and the United States would help resolve their trade conflict triggered selling of the safe-haven U.S. dollar , which fell against a basket of major currencies.

“It seems to be a risk-on event,” said Rahim Madhavji, president at Knightsbridge Foreign Exchange. “There are some rumors going around that there’s some potential breakthrough in terms of talks with China.”

Canada is a major producer of commodities, including oil, so its economy could benefit from improved prospects for global trade.

U.S. crude oil futures settled 0.9 per cent higher at US$56.09 a barrel, boosted by tightening supplies, while U.S. stocks extended last week’s rally.

The Canadian dollar traded 0.2 per cent higher at 1.3210 to the greenback, or 75.70 U.S. cents. The currency touched its strongest intraday level since Feb. 13 at 1.3207.

Gains for the loonie come ahead of a speech on Thursday by Bank of Canada Governor Stephen Poloz on monetary policy.

Money markets expect the Bank of Canada to keep interest rates on hold over the coming months after the central bank said in January that low oil prices, which have led to production cuts in Alberta, and a weak housing market, harmed the economy in the fourth quarter of 2018 and would continue to do so in the first quarter of this year.

Canadian retail sales data for December is due on Friday.

Canadian government bond prices edged lower across much of the yield curve, with the two-year down 0.5 Canadian cent to yield 1.779 per cent and the 10-year falling 5 Canadian cents to yield 1.901 per cent.

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Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 11:03am EDT.

SymbolName% changeLast
CADUSD-FX
Canadian Dollar/U.S. Dollar
+0.11%0.73784

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