The Canadian dollar rose slightly against the greenback on Monday, building modestly on gains made late last week, as investors paused to assess the recent drastic moves in the price of oil and the U.S. dollar.
The loonie, as Canada’s currency is colloquially known, has dropped steeply since late October in line with a fall in the price of crude oil, a major Canadian export.
In that same period, the U.S. dollar has climbed versus most major currencies as more hawkish-looking U.S. central bankers have expressed increasing confidence in the U.S. economic recovery.
“We could be entering a period of rest here where several currencies and several asset classes have made really large moves and now it’s time to catch your breath and rethink where things should be valued,” said Camilla Sutton, chief currency strategist at Scotiabank.
“But certainly that fall in oil prices is a material shift for the Canadian dollar,” she said.
The price of a barrel of oil has steadily fallen since mid-2014 due to excess supply and subdued demand. It rose on Monday, which Sutton said likely supported the loonie.
The Canadian dollar CAD=D4 was last seen trading at C$1.1309 to the greenback, or 88.43 U.S. cents, stronger than Friday’s close of C$1.1333, or 88.24 U.S. cents.