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Canadian dollar hits six-week high as oil rally lifts rate bets
Reuters reported Friday that the Canadian dollar rose to a six-week high against the U.S. dollar as higher oil prices fed bets of further Bank of Canada tightening, even after weak GDP figures.
- New headline Was: “Canadian dollar extends monthly gain as higher oil prices raise inflation risk”
- Our desk filed its story
Based on reporting by Reuters
The Canadian dollar strengthened Friday to its highest level in six weeks versus the U.S. dollar, Reuters reported, as a rise in oil prices supported market bets that the Bank of Canada could raise rates again1.
Reuters said the currency was about 0.2% stronger near 1.3955 per U.S. dollar, or about 71.66 U.S. cents, after an intraday high since Sept. 16, and was on course for about a 2% gain for the month1.
That move came even as Reuters cited data showing Canada's economy stalled in August for a second month, with advance estimates of a 0.1% GDP drop in September and 1.3% annualized third-quarter growth, below the Bank of Canada's 2% third-quarter projection1.
Reuters said the central bank raised its policy rate 25 basis points to 2.50% on Wednesday and left open the possibility of more increases if energy costs feed into broader inflation, while investors priced roughly even odds of a December move and a fully expected move by January1.
U.S. crude futures were about 2.7% higher near $104.80 a barrel on geopolitical supply risk, Reuters reported, and Canadian 10-year yields eased about 2.1 basis points to 3.780% as investors sought safer assets1.