TORONTO (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Monday, performing better than most other G10 currencies as oil prices climbed to their highest this year and domestic data showed a 15.8% jump in March housing starts.
The price of oil, one of Canada’s major exports, rose to a five-month high on expectations of tightening global supplies. U.S. crude oil futures settled 2.1 percent higher at $64.40 a barrel.
“For today it is very much an oil story,” said Eric Theoret, a currency strategist at Scotiabank. “When you have got oil prices hitting fresh 2019 highs it is important from a terms of trade perspective.”
Rising export prices can help boost a country’s terms of trade, making its economy wealthier.
Canadian housing starts climbed in March to a seasonally adjusted annualized rate of 192,527 units after slowing to a revised 166,290 units in February.
At 3:14 p.m. (1914 GMT), the Canadian dollar was trading 0.6% higher at 1.3312 to the greenback, or 75.12 U.S. cents. Among G10 currencies, only the Norwegian krone, which is also linked to the price of oil, performed better.
The loonie, which touched on Friday a one-week low at 1.3403, traded in a range of 1.3305 to 1.3386.
Gains for the loonie came as the U.S. dollar lost ground against a basket of major currencies. Investors squared positions before a European Central Bank meeting this week, boosting the euro.
Data on Friday from the U.S. Commodity Futures Trading Commission and Reuters calculations showed that speculators have raised their bearish bets on the Canadian dollar. As of April 2, net short positions had increased to 44,323 contracts from 39,571 in the prior week.
More than six months after the United States, Mexico and Canada agreed a new deal to govern more than $1 trillion in regional trade, the chances of the countries ratifying the pact this year are receding.
Canadian government bond prices were lower across a steeper yield curve, with the two-year down 3.5 Canadian cents to yield 1.611% and the 10-year falling 25 Canadian cents to yield 1.729%.
The 10-year yield touched its highest intraday since March 20 at 1.732%.
Reporting by Fergal Smith; Editing by David Gregorio and Marguerita Choy
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