Canadian dollar hits six-week high as investors cheer reopening of China’s borders

Canadian dollar pares weekly gain as bond yields climb

The Canadian dollar CADUSD strengthened to its highest level in more than six weeks against its U.S. counterpart on Monday, as investors grew more optimistic about the global economy and domestic data showed building permits rebounding in November.

Equity markets globally and the price of oil rose as investors scaled back expectations for U.S. Federal Reserve interest rate hikes and after China’s move to reopen its borders boosted the global economic outlook.

U.S. crude prices were up nearly 3 per cent at $75.96 a barrel. Oil is one of Canada’s major exports.

The value of Canadian building permits climbed by 14.1 per cent in November from October after declining 5.3 per cent in October, data from Statistics Canada showed.

It follows data on Friday showing that the Canadian economy added much more jobs than expected in December, boosting expectations for a quarter-point interest rate hike by the Bank of Canada later this month.

BoC Governor Tiff Macklem is due to participate in a panel discussion in Stockholm, Sweden on Tuesday, which could offer further clues on the policy outlook.

The Canadian dollar was trading 0.3 per cent higher at 1.3407 to the greenback, or 74.59 U.S. cents, after touching its strongest intraday level since Nov. 25 at 1.3358.

Speculators have cut their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday.

As of Jan. 3, net short positions had decreased to 26,766 contracts from 30,033 in the prior week.

Canadian government bond yields were mixed across a steeper curve. The 2-year eased 1.5 basis points to 3.969 per cent, while the 10-year was up 4.2 basis points at 3.131 per cent.

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