23.01.202614:31:52UTC+00Canadian Dollar Nears Monthly Highs

The Canadian dollar has gained strength, edging closer to 1.376 against the US dollar, nearing its monthly peak. This appreciation is fueled by firm oil prices, a stable Canadian policy environment, and a weaker US dollar. Key support came from the energy sector, where oil prices rose due to supply disruptions in Kazakhstan and stable North American markets, enhancing Canada’s trade conditions and boosting export revenues. Concurrently, inflationary trends oppose any immediate policy easing, signaled by a recent increase in headline CPI to 2.4%, which exceeds the Bank of Canada’s 2% target, despite signs of easing pressures at the producer level. This scenario has bolstered expectations that the Bank of Canada will maintain its policy rate at 2.25% for an extended period, reducing potential declines in yield differentials. Additionally, the Canadian dollar profited from a weaker US dollar, as the United States scaled back on trade and geopolitical tensions related to Greenland, diminishing the greenback's appeal as a safe-haven currency.