(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar rises 0.5% against the greenback
* Loonie touches its strongest level since February 2018 at
1.2521
* Price of U.S. oil settles 2.5% higher
* Canada's 10-year yield reaches a one-year high at 1.360%
By Fergal Smith
TORONTO, Feb 24 (Reuters) - The Canadian dollar strengthened
to its highest level in three years against its U.S. counterpart
on Wednesday, as oil prices rose and Canadian bond yields
climbed at a faster pace than their U.S. counterparts.
The loonie was trading 0.5% higher at 1.2523 to the
greenback, or 79.85 U.S. cents, having touched its strongest
intraday level since February 2018 at 1.2521.
"The medium term direction for CAD is pretty clear," said
Greg Anderson, global head of foreign exchange strategy at BMO
Capital Markets in New York. "Unless oil corrects lower, we
should see further CAD strength as it slowly catches up to the
oil move that has already happened."
Oil, one of Canada's major exports, has rallied more than
30% since the beginning of the year, while the Canadian dollar
is up 1.7%.
U.S. crude oil futures settled 2.5% higher at $63.22
a barrel on Wednesday after U.S. government data showed a drop
in crude output after a deep freeze disrupted production last
week.
Canada's economy will see a solid and sustained rebound this
year as COVID-19 inoculations ramp up, Bank of Canada governor
Tiff Macklem said on Tuesday, while warning that Canada's
red-hot housing market is starting to show signs of "excess
exuberance".
Canadian government bond yields were higher across a steeper
curve on Wednesday. The 10-year yield touched its
highest since February last year at 1.360% before pulling back
to 1.316%, up 7.1 basis points on the day.
The gap between Canadian and U.S. 10-year yields narrowed by
5.5 basis points to 6.4 basis points in favour of the U.S. bond.
(Reporting by Fergal Smith; editing by Emelia Sithole-Matarise
and Chizu Nomiyama)
.Source
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