Wall Street advanced and the U.S. dollar added to recent declines against a basket of major currencies after U.S. producer prices unexpectedly fell in March, boosting prospects that the Federal Reserve is near the end of its rate hiking cycle.
"Everything really took off after that much weaker-than-expected U.S. PPI report," said Erik Bregar, director of FX & precious metals risk management at Silver Gold Bull.
"I have to think that part of what we are seeing today is finally some throwing in of the towel from the speculative shorts."
Speculators have raised their bearish bets on the Canadian dollar to the highest since January 2019, data from the U.S. Commodity Futures Trading Commission showed last Friday.
The Canadian dollar was trading 0.8% higher at 1.3335 to the greenback, or 74.99 U.S. cents, its strongest level since Feb. 15.
The banking stress in the United States and Europe has had a limited impact on Canada's financial system so far, Bank of Canada Governor Tiff Macklem said, in comments that came one day after the central bank left its benchmark rate on hold at 4.50% for a second consecutive meeting.
The price of oil, one of Canada's major exports, gave back some of its recent gains on fears of a looming recession in the United States and warnings from the OPEC group about hits to summer oil demand. U.S. crude prices settled 1.3% lower at $82.16 a barrel.
Canadian government bond yields climbed across a steeper curve. The 10-year rose 9.9 basis points to 2.980%, its highest level since March 10.
(This story has been refiled to insert a missing word in the company name in paragraph 3)
(Reporting by Fergal Smith; Editing by Paul Simao and Sandra Maler)
By Fergal Smith
