Canadian Dollar Rebounds as Current Account Surplus Hits 14-Year High | Investment News

TORONTO (Reuters) – The Canadian dollar hit its highest level in more than five weeks against the greenback on Monday as data showed Canada’s current account surplus turning positive and ahead of an interest rate hike. expected this week by the Bank of Canada.

Canada’s current account surplus stood at C$5.0 billion in the first quarter, compared to a revised deficit of C$137 million in the fourth quarter. This is the largest surplus since the second quarter of 2008.

“We expect continued strength in commodities to support the current account in the second quarter (Q2), albeit offset by a larger services deficit as travel recovers more fully,” said Shelly Kaushik. , an economist at BMO Capital Markets.

Data on Canada’s GDP, due on Tuesday, could help guide expectations for the Bank of Canada’s policy outlook. Money markets expect the central bank to raise its benchmark rate by half a percentage point for the second consecutive time in a policy decision on Wednesday.

The Canadian dollar was trading up 0.5% at 1.2657 against the greenback, or 79.01 US cents, after hitting its highest level since April 22 at 1.2651.

The loonie’s gains came as global equity markets rose and the US dollar lost ground against a basket of major currencies as investors bet on a possible slowdown in US monetary tightening.

The price of oil, one of Canada’s top exports, rose 1.8% to $117.17 a barrel as traders waited to see if a European Union meeting would reach an agreement on the ban on imports of Russian oil.

U.S. crude oil futures rose 0.6% to $117.17 a barrel as China eased COVID-19 restrictions and traders anticipated the European Union will eventually reach a deal to ban imports of Russian oil.

Government of Canada bond yields were higher across the curve, with 10-year bonds rising 3.5 basis points to 2.825%.

(Reporting by Fergal Smith; editing by Barbara Lewis and Diane Craft)

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