Canadian dollar adds to weekly gain as oil prices climb

TORONTO (Reuters) – The Canadian dollar strengthened against its U.S. counterpart on Friday as higher oil prices offset signs of domestic economic damage from the occupation by protesters of key border crossings between the United States and Canada.

The price of oil, one of Canada’s major exports, rose after the International Energy Agency (IEA) said oil markets were tight.

U.S. crude prices gained 1.1% to $90.87 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2695 to the greenback, or 78.77 U.S. cents.

The currency was recouping some of its decline from the day before when hotter-than-expected U.S. inflation data for January fueled bets of a 50 basis points hike by the Federal Reserve next month.

For the week, the loonie was on track to advance 0.5%.

Automakers and some manufacturers are looking to the skies as they seek alternatives for moving products caught up in Canadian trucking protests that have hit supply chains on both sides of the U.S.-Canada border, union and industry executives said.

Despite the disruption, money markets continue to expect the Bank of Canada to hike interest rates in March to fight inflation. Canada is due to release its January inflation report next Wednesday.

Canadian government bond yields eased across the curve, tracking the move in U.S. Treasuries. The 10-year was down 1.1 basis points at 1.910%, after touching on Thursday its highest intraday level in nearly three years at 1.956%.

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