Canadian dollar hits near 3-month high as oil prices climb

The Canadian dollar touched a near three-month high against its U.S. counterpart on Thursday and bond yields rose as investors weighed higher oil prices and prospects for a trade deal between the U.S. and Canada.

The loonie was trading 0.1% higher at 1.3790 per U.S. dollar, or 72.52 U.S. cents, after touching its strongest intraday level since May 21 at 1.3757.

• Higher oil prices and broad-based U.S. dollar weakness linked to concern about rising U.S. government debt were the main factors supportive of the currency, said Darren Richardson, chief operating officer at Vantry Capital Inc.

• Total U.S. debt has topped $40 trillion for the first time, the Treasury Department said on Wednesday.

• The U.S. dollar edged higher against a basket of major currencies after it was pressured on Wednesday by the Treasury Department's move to calm a bond market selloff.

• The price of oil, one of Canada's major exports, rose after U.S. President Donald Trump warned of retaliation against nations supporting Iran. U.S. crude oil futures were trading 2% higher at $87.50 a barrel.

• Top trade negotiators from Canada and the U.S. will meet for the second day running in Washington on Thursday in a bid to finalize a trade deal that could help reduce months of tariffs and counter duties.

• "There is some optimism there but I think the market is a bit exhausted when it comes to trade," Richardson said.

• Canadian bond yields moved higher across the curve, tracking moves in U.S. Treasuries. The 10-year was up 5.8 basis points at 3.752%, after earlier touching its highest level since May 2024 at 3.760%.

• Over the past month or so, the 10-year has increased about 19 basis points, which is the most among G7 sovereign bonds, as data pointed to recovery in the domestic economy after a slow start to the year.

• Canadian retail sales data for June, due on Friday, could offer additional clues on the state of the domestic economy. Economists forecast a month-over-month gain of 0.4%. (Reporting by Fergal Smith; Editing by Nia Williams)

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