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Canadian dollar rally accelerates as GDP and jobs data top oil

The loonie’s jump came even as Brent crude stalled below $90 a barrel, shifting focus to expectations for Bank of Canada rate hikes.

Reported · Written up by our desk · Major Pairs

The Canadian dollar’s rally accelerated sharply this week, even though it was not supported by oil prices, Action Forex reported. With Canada a major oil producer, the currency typically moves with crude, but Brent crude stalled, capped below $90 a barrel, as the loonie climbed.

The move is tied mainly to Canada’s macro data. Canada’s economy grew at an annualized 3.4% in the second quarter, beating both economists’ expectations and the Bank of Canada’s own forecast from weeks earlier, according to Action Forex.

Followed by that growth, Canada added roughly 75,000 jobs in July, more than four times what was expected, and the unemployment rate fell. Action Forex said the close pairing of these two releases points to an economy picking up speed rather than just holding steady.

The article notes, however, that price action alone cannot confirm what is driving the stronger loonie, including whether traders are repositioning for Bank of Canada policy changes. It also said that interest-rate markets had already been leaning toward pricing a Bank of Canada rate hike by year end before the jobs report landed.

Latest closeWTI crude $81.19 ▼2.5%|Brent $86.96 ▼2.3%

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