TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Wednesday as oil prices rose and investors weighed prospects of U.S. economic stimulus, while Canada's 10-year yield climbed to its highest in more than two months.
The loonie
U.S. stock index futures rose following a pullback on Wall Street in the previous session, with investors remaining on edge due to a stalemate over the next coronavirus federal aid bill.
Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude (CLc1) prices were up 2.1% at $42.47 a barrel after an industry report showed U.S. crude inventories last week fell more than analysts had expected, bolstering hopes that fuel demand in the world's biggest economy can weather the coronavirus pandemic.
Canadian government bond yields were higher across a steeper curve ahead of the largest-ever auction of U.S. 10-year notes. The Canadian 10-year yield (CA10YT=RR) rose 4 basis points to 0.617%, having touched its highest intraday level since June 11 at 0.621%.
Canada's manufacturing sales report for June is due on Friday.