TORONTO (Reuters) - The Canadian dollar edged lower against its U.S. counterpart on Tuesday as a stronger greenback offset higher prices for crude oil, one of Canada’s major exports.
The U.S. dollar .DXY rose to an 11-day high against a basket of major currencies, continuing a recovery from four-month lows plumbed at the start of the year.
Oil rose to its highest since May 2015, supported by OPEC-led production cuts and expectations U.S. crude inventories fell for an eighth week.
U.S. crude CLc1 prices were up 0.75 percent at $62.19 a barrel.
At 9:14 a.m. EST (1414 GMT), the Canadian dollar CAD=D4 was trading at C$1.2433 to the greenback, or 80.43 U.S. cents, down 0.1 percent. The currency traded in a range of C$1.2399 to C$1.2448.
The loonie touched its strongest level in three months at C$1.2355 on Friday after stronger-than-expected domestic jobs data prompted investors to bet on a Bank of Canada interest rate hike as soon as Jan. 17. BOCWATCH
Chances of a rate hike next week have more than doubled to 80 percent since the jobs data, the overnight index swaps market indicated. They got a further boost from a Bank of Canada business survey on Monday that showed optimism.
Canadian government bond prices were lower across a steeper yield curve, with the two-year CA2YT=RR down 2 Canadian cents to yield 1.796 percent and the 10-year CA10YT=RR falling 22 Canadian cents to yield 2.184 percent.
The 2-year yield touched its highest intraday since June 2011 at 1.799 percent.
Canadian housing starts fell in December to a seasonally adjusted annual rate of 216,980 from November’s downwardly revised 251,675. Economists had expected a decline to a 212,500 annual rate.
Reporting by Fergal Smith; Editing by Andrew Hay