TORONTO (Reuters) - The Canadian dollar rose against its broadly weaker U.S. counterpart on Thursday, boosted by higher oil prices and data the day before that showed strong growth in the domestic economy.
At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was trading 0.3 percent higher at C$1.2269 to the greenback, or 81.51 U.S. cents.
The currency traded in a range of C$1.2261 to C$1.2331. On Wednesday, it touched its strongest in more than four months at C$1.2250.
“This looks to me like an extension of the move we saw yesterday after the GDP print and also reflective of the defensive tone in the U.S. dollar overall,” said Bipan Rai, executive director and senior macro strategist at CIBC Capital Markets.
The Canadian economy accelerated in November by the most in six months, keeping the Bank of Canada on track to raise interest rates again before long.
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On Thursday, data showed that the pace of growth in the Canadian manufacturing sector picked up at the start of the year to its highest level in nine months.
“An improved mood in NAFTA negotiations” has added to support for the loonie, Rai said.
Canadian Prime Minister Justin Trudeau said on Wednesday he did not think U.S. President Donald Trump would pull out of the North American Free Trade Agreement.
The price of oil, one of Canada’s major exports, rose after a survey showed commitment by the Organization of the Petroleum Exporting Countries to supply cuts remains in place.
U.S. crude oil futures CLc1 settled 1.7 percent higher at $65.80 a barrel.
The Canadian dollar is ditching its close shadowing of yield spreads, clearing the way for other metrics to drive the currency, as interest rate hike cycles in North America become more established and investors bet on a weaker greenback.
The U.S. dollar .DXY fell against a basket of major currencies after Federal Reserve comments on Wednesday about rising inflation this year failed to give a lasting boost to the currency.
Canadian government bond prices fell across a steeper yield curve in sympathy with U.S. Treasuries.
The 10-year CA10YT=RR fell 60 Canadian cents to yield 2.368 percent. Its yield touched its highest intraday since May 2014 at 2.383 percent.
Reporting by Fergal Smith; Editing by Chizu Nomiyama and David Gregorio