TORONTO, Aug 11 (Reuters) - The Canadian dollar strengthened to a two-month high against its U.S. counterpart on Tuesday as oil prices rose, but the move was limited ahead of a U.S. inflation report.
The loonie was trading 0.1% higher at 1.3920 per U.S. dollar, or 71.84 U.S. cents, after touching its strongest intraday level since June 10 at 1.3916.
"The loonie continues to trade with the wind at its back," strategists at Monex Europe said in a note, adding that recent "blowout" jobs data and higher oil prices have helped underpin the currency.
Data on Friday showed Canada's economy added 75,100 jobs in July and the unemployment rate dropped to a two-year low.
The U.S. price of oil, one of Canada's major exports, rose 1.3% to $83.16 a barrel as the market assessed signs of progress in talks between Oman and Iran over shipping through the Strait of Hormuz.
"With the domestic calendar empty today, the loonie should continue to trade off energy prices and broad dollar direction into tomorrow's U.S. CPI," the Monex Europe strategists said. "Trade headlines remain a key event risk, however."
Canadian and U.S. officials are working on a potential trade deal to pitch to President Donald Trump next week, CBC News reported, citing sources who were not authorized to speak on the record.
Trump has proposed a new set of tariffs on Canadian goods scheduled to take effect next week. Canadian trade representatives are meeting with U.S. officials regularly in an attempt to avoid them.
Economists expect U.S. inflation data, due on Wednesday, to show consumer price inflation re-accelerated last month after falling in June.
Canadian bond yields eased across the curve, tracking moves in U.S. Treasuries.
The 10-year was down 2.6 basis points at 3.695%, after touching its highest level since May 2024 at 3.755%.
Reporting by Fergal Smith Editing by Rod Nickel
