Loonie Higher on Higher Oil and Struggling USD

The Canadian dollar strengthened to a near 3-month high against its U.S. counterpart on Thursday as oil prices rose and the greenback extended losses that began after U.S. President-elect Donald Trump’s news conference a day earlier.

The U.S. dollar fell against a basket of major currencies, pressured by a loss of confidence in the U.S. reflation trade which has dominated markets since Trump’s election. The price of oil, one of Canada’s major exports, rose on reports key OPEC members were cutting production as promised and on forecasts of strong demand growth in China. U.S. crude prices were up 2.26 percent at $53.43 a barrel.

At 9:19 a.m. ET (1419 GMT), the Canadian dollar was trading at C$1.3093 to the greenback, or 76.38 U.S. cents, stronger than Wednesday’s close of C$1.3177, or 75.89 U.S. cents.

The currency’s weakest level of the session was C$1.3195, while it touched its strongest since Oct. 19 at C$1.3028.

Gains for the loonie follow upbeat domestic data since the start of the year, including a surge in jobs in December and the first trade surplus in more than two years in November while a Bank of Canada survey pointed to improving business conditions.

via Kitco

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza