Toronto: The Canadian dollar showcased another week of rising performance this week, bringing its gains in seven consecutive weeks-the longest streak since May 2021. On Thursday, as the loonie added 0.1%, the loonie was valued at 1.3845-CAD/USD (or 72.23 US cents), coming closer to its five-month high of 1.3827 earlier this week.
The Canadian dollar's recent strength flowed from rising oil prices, with crude oil being one of Canada's key exports. On Thursday, crude oil climbed 3.5% to $64.63 per barrel after the announcement of new US sanctions on Iranian oil exports, triggering global supply concerns and boosting energy-linked currencies like the loonie.
Another principal factor was the BoC decision to suspend interest rate cuts on Wednesday, maintaining the benchmark rate at 2.75% after seven consecutive reductions. The central bank justified the pause in cuts on account of the increased uncertainty, attributed to US trade policy, regarding the economy.
Currency analysts note the broader weakening of the US dollar has thereby offered the loonie additional support. Increasingly uneasy over the economic costs of escalating tariffs, investors are pulling funds out of US assets. USD/CAD may test 1.40 yet could trend lower in the medium-term, stated Marc Chandler, Chief Market Strategist at Bannockburn Global Forex.
Canadians kept pouring their investments across the border, despite the tensions existing between the US and Canada. February registered the highest ever purchases of US stocks by Canadians as the American markets were on historic highs.
The Canadian dollar's robustness over this recent spell signifies an amalgamation of strong economic fundamentals, oil dynamics on the global stage, and a shift in investor sentiment, marking the loonie as one of the top-performing currencies in weeks.
[Source Credit: Business Recorder]
