The Canadian dollar strengthened on Thursday as higher crude prices and expectations of a Bank of Canada rate increase next week supported it. The U.S. dollar fell against the loonie for a sixth consecutive session.
The Canadian dollar strengthened on Thursday, with the U.S. dollar extending its decline against the loonie for a sixth consecutive session. Rising crude prices and expectations of a Bank of Canada rate increase next week lifted the currency.
U.S. dollar hits lowest level since September 21
The U.S. dollar was trading around C$1.4025 in early European trading, its lowest level since September 21. That put the Canadian dollar at approximately 71.30 U.S. cents, based on an indicative market level rather than a verified quote.
Oil prices climbed after drone attacks on Saudi and Russian energy infrastructure heightened concerns about potential supply disruptions. That lent support to the commodity-linked Canadian dollar, while a softer U.S. dollar also helped the loonie extend its recent gains.
Investors position for a Bank of Canada hike
Investors are increasingly positioning for a possible rate increase on October 28. Markets have priced in a strong chance of a 25-basis-point hike that would lift the benchmark rate to 2.50%, as persistent energy-price pressures raise concerns about the inflation outlook.
Canadian retail sales on Friday come next, alongside U.S. economic indicators, which could offer fresh clues about consumer demand and the relative strength of the two economies. Even so, uncertainty around interest-rate decisions and geopolitical tensions could drive further volatility in the currency market.
Source: Investing.com
Trading involves risk.
Risk Disclaimer
