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Canadian dollar climbs to 2-week high as China eases COVID curbs

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·1 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto
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TORONTO (Reuters) - The Canadian dollar strengthened for a third straight day against its U.S. counterpart on Tuesday as the easing of COVID-19 restrictions in China bolstered investor sentiment.

Global shares were higher and the price of oil, one of Canada's major exports, rose following China's decision to ease some quarantine requirements for international arrivals, a move that raised hopes for stronger growth and a revival in demand for commodities.

Adding to support for oil, major producers Saudi Arabia and the United Arab Emirates looked unlikely to be able to boost output significantly while Western governments agreed to explore ways to cap the price of Russian oil.

U.S. crude prices advanced 1.3% to $110.98 a barrel, while the Canadian dollar was trading 0.3% higher at 1.2844 to the greenback, or 77.86 U.S. cents. It touched its strongest level since June 13 at 1.2820.

Still, the loonie was on track to decline 1.6% in June after global financial markets were buffeted by recession fears.

Canada's GDP data for April, due to be released on Thursday, could offer clues on the strength of the domestic economy.

With inflation soaring, money markets expect the Bank of Canada to raise interest rates by three-quarters of a percentage point at its next policy decision on July 13, which would be its biggest hike in 24 years.

Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries.

The 10-year rose 4.9 basis points to 3.43%. Earlier this month, it touched a 12-year high at 3.664%.

(Reporting by Fergal Smith; Editing by Paul Simao)

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