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Canadian dollar strengthens 0.4% against the greenback
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Touches its strongest level since Feb. 16 at 1.3379
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Price of U.S. oil falls 0.6%
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Canada-U.S. 2-year spread hits narrowest since September
TORONTO, April 13 (Reuters) - The Canadian dollar strengthened to its highest level in nearly two months against its U.S. counterpart on Thursday as investors weighed U.S. economic data and after the Bank of Canada pushed back the previous day against bets it would cut interest rates this year. The U.S. dollar extended recent losses against a basket of major currencies and yields on U.S. Treasuries slipped as data showed a moderation in the rise in producer prices last month and an uptick in jobless claims. The data suggested that higher borrowing costs are taking a toll on the U.S. economy which could lead the Federal Reserve to pause its interest rate hiking campaign after an expected increase next month. The Bank of Canada has already moved to the sidelines. On Wednesday, it left its key overnight interest rate on hold at 4.50% for a second straight meeting but struck a hawkish tone, playing down market expectations for a rate cut this year as the risk of a recession diminished. The Canadian dollar was trading 0.4% higher at 1.3379 to the greenback, or 74.74 U.S. cents, its strongest level since Feb. 16. The price of oil, one of Canada's major exports, gave back some of its recent gains as the market weighed the prospect of tight supply against possible recession in the United States, the world's largest oil consumer.
U.S. crude prices fell 0.6% to $82.74 a barrel, while Canadian government bond yields were mixed across a steeper curve. The 2-year eased 2.3 basis points to 3.759%, while the gap between it and its U.S. equivalent narrowed by 2.7 basis points to about 16 basis points in favor of the U.S. bond, its smallest since September. (Reporting by Fergal Smith; Editing by Paul Simao)
