Fergal Smith

TORONTO (Reuters – On Monday the Canadian dollar rose against the greenback to the highest point in over five weeks. Data showed that Canada’s current accounts surplus turned positive, ahead of an anticipated interest rate increase by the Bank of Canada.

Canada’s current accounts surplus in Q1 was C$5.0Billion, a significant increase on the C$137M deficit for the fourth quarter. This was the largest surplus in the first quarter 2008, surpassing the C$137 million deficit of the fourth quarter.

Shelly Kaushik from BMO Capital Markets, an economist said that “we expect the continued strength of commodities to support the current balance in Q2 (second quarter), but offset by deeper services deficits as travel recovers better.”

Canada’s GDP data due Tuesday could guide the Bank of Canada’s policy outlook. Markets expect that Wednesday’s central bank will increase its benchmark rate by half of a point.

Canadian dollars traded 0.5% higher at 1.2657, which is 79.01 U.S.cents, following touching their strongest level since April 22, at 1.2651.

As the world share market rose, gains were made for the U.S. dollar against a basket currency. With investors betting on the possibility of U.S. tightening their monetary policy, the U.S. lost ground.

As traders waited to find out if a European Union meeting would lead to an agreement banning Russian oil imports, the price of oil rose 1.8%.

Oil futures rose 0.6%, to $117.17 per barrel after China relaxed COVID-19 limitations. Traders priced in the possibility that Russia will be banned from imports to the European Union.

Canadian government bond yields rose across the curve. The 10-year was up 3.5 basis point at 2.825%.