The Canadian dollar shook off early weakness to rise to a fresh seven-month high against its broadly weaker U.S. counterpart on Wednesday, as investors’ appetite for riskier assets rose and firmer oil prices provided support.
The Canadian dollar was at 1.314 to the greenback, or 76.10 U.S. cents, stronger than Tuesday’s close of 1.3168, or 75.94 U.S. cents.
The Canadian dollar’s gains followed a 0.3 per cent rise in the previous session, and lifted it to an intraday high of 1.3132 to the greenback, its strongest since Jan. 24.
The U.S. dollar, which started the day stronger, ceded ground to most major currencies, as investors bid up stocks as well as risk-sensitive currencies such as the Australian dollar.
“The trade over the last little while has been to be bullish risk and to bearish the U.S. dollar. This is just a continuation of that move,” said Bipan Rai, North America head of FX strategy at CIBC Capital Markets.
Data on Wednesday showed new orders for key U.S.-made capital goods increased in July, though the pace slowed from June’s robust gain, suggesting the rebound in business investment would be gradual amid uncertainty about the course of the COVID-19 pandemic.
No obvious front-runner has emerged among monetary policy alternatives as the Bank of Canada reviews its options ahead of next year’s inflation target renewal, Bank of Canada senior deputy governor Carolyn Wilkins, said in opening remarks at a workshop on Wednesday.
The Canadian dollar also found support as the price of oil, one of Canada’s major exports, held near $46 a barrel on Wednesday, helped by U.S. producers shutting output in the Gulf of Mexico ahead of Hurricane Laura.
Canadian government bond prices were lower across the maturity curve. The two-year yield was at 0.304 per cent up from 0.292 per cent late on Tuesday, while the benchmark Canadian 10-year yield rose to 0.608 per cent from 0.60 per cent.
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