Canadian dollar notches biggest gain in 4 months as investor optimism rises

Dated: 01/29/2019

Views: 46

Canadian dollar notches biggest gain in 4 months as investor optimism rises

Toronto

THE Canadian dollar rallied to a two-week high against its broadly weaker US counterpart on Friday last week as oil prices rose and a deal to end the US government shutdown helped boost stocks.

US President Donald Trump said he and lawmakers agreed to advance a three-week stop-gap spending plan to reopen the government.

This helped boost investor sentiment, which faltered in recent days in the face of revived jitters related to the shutdown and the prolonged US-China tariff spat. Canada runs a current account deficit and exports many commodities, including oil, so its economy could benefit from an improved outlook for the global flow of trade or capital.

"It is a risk-on day," said Michael Greenberg, portfolio manager for Franklin Templeton Multi-Asset Solutions. "Equity markets are up, yields are higher, credit spreads are tightening, so that tends to be a good environment for the CAD as well." The price of oil, one of Canada's major exports, rose as political turmoil in Venezuela threatened to tighten crude supply. US crude oil futures settled 1.1 per cent higher at US$53.69 a barrel.

ADVERTISING

At 4.09 pm (2109 GMT) on Friday, the Canadian dollar was trading 1 per cent higher at 1.3221 to the greenback, or 75.64 US cents, which was its biggest gain since September. The currency touched its strongest level since Jan 11 at 1.3218.

For the week, the loonie rose 0.3 per cent despite weak domestic data that prompted some economists to project that Canada's economy contracted in November.

Chances of another Bank of Canada interest rate hike by the summer have fallen to about 30 per cent from more than 50 per cent at the end of last week.

The US dollar fell to a 10-day low against a basket of currencies as traders' focus shifted to the Federal Reserve's policy meeting next week.

"We still do think that the Bank of Canada and the Fed will likely have the opportunity to raise rates a little bit this year but probably less than they thought they could three months ago," Greenberg said. REUTERS

Blog author image

Steven Axford

Steve Axford grew up in Victoria, BC and has always been active in his community. Steve is a Victoria Cougars Hockey Team alumni as well as a Victoria Shamrocks (intermediate) alumni. During his time....

Latest Blog Posts

Victoria real estate market continues to adapt in the changing times

 A total of 979 properties sold in the Victoria Real Estate Board region this July, 38.7 per cent more than the 706 properties sold in July 2019 and 21.2 per cent more than the previous month

Read More

No clear end to pandemic-related uncertainty in B.C. housing market

VANCOUVER — A new forecast says the housing market in British Columbia remains uncertain during the COVID-19 pandemic.Central 1 says it expects home sales to recover marginally in 2020 and

Read More

Victoria real estate market impacted by many different factors in June

A total of 808 properties sold in the Victoria Real Estate Board region this June, 9.2 per cent more than the 740 properties sold in June 2019 and 76.8 per cent more than the previous month of May

Read More

Why housing is still the best investment for most Canadians

Owning a home remains the largest single investment for most Canadians. So it’s not surprising that fear over an economy turned upside down literally hits home for so many. The Canada

Read More