The Canadian dollar CADUSD strengthened to its highest level in nearly two months against its U.S. counterpart on Monday, as oil prices climbed and investors weighed hawkish comments by Federal Reserve Chairman Jerome Powell.
The loonie edged 0.1% higher to 1.2595 per greenback, or 79.40 U.S. cents, having touched its strongest intraday level since Jan. 26 at 1.2566.
It was the only G10 currency to gain ground against the greenback, adding to its 1.1% advance last week.
“The Canadian dollar is hanging on to last week’s rally as U.S. stocks largely do the same,” said Erik Bregar, director, FX & precious metals risk management at Silver Gold Bull.
Wall Street edged lower after strong gains last week. Powell suggested a more aggressive tightening of monetary policy than previously anticipated, adding to ongoing uncertainties, including Russia’s invasion of Ukraine.
The price of oil, one of Canada’s major exports, settled 7.1% higher at $112.12 a barrel as European Union nations considered joining the United States in a Russian oil embargo and after a weekend attack on Saudi oil facilities.
The loonie was notching its fifth straight day of gains, which is the longest winning streak since September. Speculators have raised bullish bets on Canada’s currency to the highest in six weeks.
“The momentum for the loonie remains higher so long as USD-CAD stays below the 1.2630-40 (area) on a daily closing basis,” Bregar said.
Canada’s planned issuance of its first green bond this week is expected to attract international as well as domestic investors and could help speed up investment in climate-friendly infrastructure projects.
Canadian government bond yields were much higher across the curve, tracking the move in U.S. Treasuries. The 10-year
rate touched its highest level since November 2018 at 2.338%, up 14.5 basis points on the day.
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