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Canadian dollar strengthens to its strongest level in two months vs USD
The loonie held just above 1.3900 per USD as the US dollar pulled back, after shifts in US payroll data and higher crude oil supported the Canadian bid.
The Canadian dollar firmed to its strongest level against the US dollar in more than two months, holding just above 1.3900 into the afternoon, according to FXStreet. The move extended a streak of weaker sessions for the pair, with Monday’s 35-pip range contained within Friday’s range, as the rate appeared pinned near the lower end.
The dollar’s retreat came after two months of US dollar gains against the Canadian dollar were unwound across roughly ten trading days, FXStreet said. The article notes that while earlier developments had favored the US dollar as a safe haven, recent pricing behavior shifted toward supporting the Canadian currency.
FXStreet attributed part of the change to how oil strength and trade terms affect Canada’s inflation outlook. It said July’s Monetary Policy Report conditioned the inflation path on the loonie averaging around 71 cents US over the projection horizon, and that spot at 71.8 cents is close to a full cent stronger than that assumption, widening the gap since the report’s July 10 finalization.
On the pricing drivers, the outlet pointed to Friday’s payrolls contraction and Monday’s crude oil bid, paired with Canada’s domestic backdrop that it described as a technical recession. It also said futures repriced a September Federal Reserve increase to 49.9% from 44.1% on Friday, contributing to the US dollar losing ground.
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