The Canadian dollar rose 0.2% to C$1.3955 per U.S. dollar and was on track for a 2% monthly gain as higher oil prices supported expectations for further Bank of Canada rate increases, despite weak growth data.
The Canadian dollar touched its strongest level against the U.S. dollar since September 16, at C$1.3943, and was on track for its biggest monthly advance since April. Canada's economy stalled in August, while an advance estimate showed GDP declining 0.1% in September and annualized third-quarter growth of 1.3%, below the Bank of Canada's 2% projection.
Oil prices rose, with U.S. crude futures up 2.7% to $104.80 a barrel. The Bank of Canada raised its key rate by 25 basis points to 2.50% on Wednesday and said further increases might be needed to prevent higher energy costs from driving broader inflation. Investors priced in about a 50% chance of another increase in December and fully priced in a move by January.
Canadian bond yields fell across a steeper curve as a selloff in technology stocks pushed investors toward safe-haven assets. The 10-year yield was down 2.1 basis points at 3.780%, after reaching its lowest level since September 4.
