The Canadian dollar has gained 2.1 percent so far in July and is up 0.9 percent this week. Alberta holds the largest crude deposits outside the Middle East. Oil strengthened 0.9 percent to $135.71 a barrel after falling more than $10 during the past two days.
The Canadian dollar increased 0.2 percent to C$1.0003 at 11:36 a.m. in Toronto, from C$1.0019 yesterday. One Canadian dollar buys 99.96 U.S. cents.
The currency has traded near parity with its U.S. counterpart this year. It touched a 2008 low of C$1.0379 on Jan. 22, and a high of 97.12 cents per U.S. dollar on Feb. 28.
The currency remained higher after the Bank of Canada released its monetary policy report. The central bank said inflation will exceed the top of its target range until the second quarter of 2009, saying the current benchmark interest rate of 3 percent is ``appropriate'' to slow prices as energy costs stabilize. Consumer prices rose 1 percent in May, the most since 1991.
Inflation on a year-over-year basis will peak at 4.3 percent between January and March of next year and slow to 2.9 percent in the next quarter, assuming energy costs match prices on futures contracts, the central bank said today in Ottawa.
Consumer prices will gain 3.8 percent during the current three-month period and 4.1 percent between October and December, the central bank said.
International investors bought a net C$10.7 billion ($10.7 billion) of Canadian securities. Economists surveyed by Bloomberg News forecast the report would show non-residents bought C$3.5 billion.