The Canadian dollar CADUSD strengthened to its highest level in more than six weeks against its U.S. counterpart on Monday as investors’ appetite for risk increased, but its gains were held in check by U.S. inflation data this week.
The Canadian dollar was trading 0.5% higher at 1.3370 to the greenback, or 74.79 U.S. cents, after touching its strongest intraday level since Nov. 25 at 1.3358.
“Risk-on sentiment has the greenback down against everything today,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York, adding that “relatively solid” technical support around 1.3350 for USD-CAD likely limited gains for the loonie.
The U.S. dollar fell against a basket of major currencies and the S&P 500 added to last week’s gains as recent signs of a cooling labour market supported bets of a slower pace of interest rate hikes by the Federal Reserve.
Adding to support for the loonie, the price of oil, one of Canada’s major exports, rose after China’s move to reopen its borders boosted the outlook for fuel demand. U.S. crude futures settled 1.2% higher at $74.63 a barrel.
Bank of Canada Governor Tiff Macklem is due to participate in a panel discussion in Stockholm, Sweden, on Tuesday. Investors are also awaiting the release of U.S. consumer price index data for December on Thursday.
“Unless Macklem surprises us with a policy hint in his panel comments tomorrow, the U.S. CPI print should be the event of the week,” Anderson said.
Domestic data on Monday showed that the value of building permits climbed by 14.1% in November from the month before after declining 5.3% in October.
Canadian government bond yields fell across a steeper curve. The 10-year was down 2.5 basis points at 3.064%, its lowest level since Dec. 22.