TORONTO: The Canadian dollar moved closer on Thursday to a recent five-month high against its US counterpart as oil prices rose and one day after the Bank of Canada paused its interest rate cutting campaign.
The loonie was trading 0.1% higher at 1.3845 per US dollar, or 72.23 US cents, after touching on Monday its strongest level since November 6 at 1.3827. For the week, the loonie was up 0.1%, which would be its seventh straight week of gains, the longest such stretch since May 2021.
The currency has benefited from recent broad-based declines for the US dollar, said Marc Chandler, chief market strategist at Bannockburn Global Forex.
Concerns over the economic impact of tariffs and investors shifting investments outside the United States led to the greenback hitting a three-year low last week against a basket of major currencies.
“The 200-day moving average comes in right above 1.40 so I think that’s the top of the range (for USD-CAD),” Chandler said. “I think we might have to test that but I think the next big move is probably still lower.”
The price of oil, one of Canada’s major exports, increased 3.5% to $64.63 a barrel after the US imposed new sanctions to curb Iranian oil exports, elevating supply concerns.
The BoC held its benchmark rate at 2.75% on Wednesday, its first pause after seven consecutive cuts, and said the uncertainty around US tariffs made it impossible to issue regular economic forecasts.
Despite tensions between Canada and the United States, Canadians bought a record amount of American shares in February, as US stock markets hit an all-time high.
Comments