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The Canadian dollar strengthened to a nearly six-week high against its U.S. counterpart on Monday, boosted by higher oil prices and a business survey from the Bank of Canada that supported expectations for further interest rate hikes.

Canadian companies remain optimistic about sales growth despite trade uncertainties, the central bank said in the first-quarter report.

The Bank of Canada has raised interest rates three times since July. Chances of another hike by July edged up to nearly 80 per cent from 72 per cent before the report, the overnight index swaps market indicated.

“The business outlook survey was fairly friendly to the Canadian dollar,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets. “The other piece of the puzzle is oil prices ... and the recovery in the WCS (Western Canadian Select) spot price continues.”

The price of oil, one of Canada’s major exports, was supported by a rebound in the stock market as concerns of a trade war between the United States and China eased. U.S. crude oil futures settled 2.2 per cent higher at $63.42 a barrel.

Canadian crude tends to trade at a discount to U.S. crude, due, in part, to supply constraints. But the gap has plunged by more than $13 since March, data from Shorcan Energy showed.

Business groups and local officials called for Canada’s government to guarantee that an expansion of the Trans Mountain pipeline is completed, after operator Kinder Morgan Canada halted most work on the $7.4 billion project.

At 4 p.m., the Canadian dollar was trading 0.6 per cent higher at $1.2710 to the greenback, or 78.68 U.S. cents. The currency touched its strongest level since Feb. 27 at $1.2687.

Last week, stronger-than-expected domestic jobs data and upbeat comments by officials from the United States, Mexico and Canada about the chances of a deal soon to revamp the North American Free Trade Agreement helped boost the loonie by 0.9 per cent. Canada sends 75 per cent of its exports to the United States.

Still, talks to rework NAFTA are not advanced enough for the three countries to announce a deal “in principle” at this month’s Summit of the Americas in Lima, according to two people familiar with the matter.

Canadian government bond prices were mixed across the yield curve, with the two-year down 0.5 Canadian cent to yield 1.794 per cent and the 10-year rising 3 Canadian cents to yield 2.14 per cent.

The Canadian dollar edged higher against its U.S. counterpart on Monday ahead of a report that could help guide Bank of Canada interest rate expectations, as lower trade tensions helped boost stock and oil prices.

Stocks and the price of oil, one of Canada’s major exports, recovered after officials of the Trump administration stressed the dispute with China could be resolved through talks.

Canada’s commodity-linked economy could be hurt if trade tensions slow global growth.

U.S. crude prices were up 1.3 per cent at $62.88 a barrel.

The Bank of Canada will release its business outlook report, based on a survey of about 100 companies, at 10:30 a.m. EDT.

The central bank has raised interest rates three times since July and money markets see a 75 per cent chance of another hike by July.

At 9:16 a.m. EDT, the Canadian dollar was trading 0.1 per cent higher at $1.2772 to the greenback, or 78.30 U.S. cents.

The currency traded in a range of $1.2765 to $1.2818. It touched its strongest intraday on Friday in more than five weeks at $1.2732.

Talks to rework the North American Free Trade Agreement are not advanced enough for the United States, Mexico and Canada to announce a deal “in principle” at this month’s Summit of the Americas in Lima, according to two people familiar with matter.

Canada sends about 75 per cent of its exports to the United States. Upbeat comments by officials from the three countries about the chances of a pact soon and stronger-than-expected domestic jobs data helped boost the loonie 0.9 per cent last week.

Canadian government bond prices were mixed across the yield curve, with the two-year up 0.5 cents to yield 1.788 per cent and the 10-year flat to yield 2.144 per cent.

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SymbolName% changeLast
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+0.11%0.73785

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