The Canadian dollar strengthened to its highest level in nearly two weeks against its U.S. counterpart on Tuesday, as oil prices rose and speculation the Federal Reserve would soon cut interest rates weighed on the greenback.
At 4:08 p.m. (2008 GMT), the Canadian dollar was trading 0.3% higher at 1.3394 to the greenback, or 74.66 U.S. cents. The currency touched its strongest level since May 22 at 1.3381.
“The bulk of the move” for the Canadian dollar was due to broader pressure on the greenback as the U.S. Treasury market prices in a number of interest rate cuts from the Federal Reserve, said Mazen Issa, a senior FX strategist at TD Securities.
The U.S. dollar hit its lowest since mid-April as Federal Reserve Chair Jerome Powell alluded to the possibility of an interest rate cut in the face of economic risks, including the global trade war.
The prospect of a U.S. rate cut helped boost global stocks and commodity prices, with U.S. crude oil futures settling 0.4% higher at $53.48 a barrel. Oil is one of Canada’s major exports.
Canadian Prime Minister Justin Trudeau, asked about U.S. President Donald Trump’s threat to impose tariffs on Mexico, said Ottawa would move ahead in a responsible way to ratify a new North American free trade pact.
Canadian government bond prices were lower across a steeper yield curve, with the two-year down 5 Canadian cents to yield 1.386% and the 10-year falling 53 Canadian cents to yield 1.474%.
On Monday, the 10-year yield hit its lowest since June 2017 at 1.419%.
Canada’s trade data for April is due on Thursday and the May jobs report is due on Friday.