Canadian Dollar rises on weaker US Dollar, rising oil prices
USD/CAD extends its losses for the second consecutive day, trading around 1.3830 during the Asian hours on Thursday. The currency pair experiences downward pressure as a sharp rally in the Japanese Yen (JPY) weighed heavily on the US Dollar (USD).
The Canadian Dollar demonstrated strength on Thursday as the US Dollar faced a decline, propelled by a notable surge in crude oil prices. The US Dollar experienced pressure from a surge in the Japanese Yen, which is believed to be due to potential intervention by authorities to support the currency. The US job market data released on Wednesday showed a slowdown in private employment growth for August, with only 38,000 new positions created, below forecasts.
Despite this, markets still anticipate a two-thirds chance of a Federal Reserve interest rate increase later in the month. The Canadian Dollar gained ground as it is a commodity-based currency, and oil prices, a key export for Canada, rose amid geopolitical concerns in the Middle East and the ongoing effort to reopen the Strait of Hormuz.
The Bank of Canada's interest rate decisions, the price of oil, Canada's economic health, inflation, and the trade balance also influence the Canadian Dollar. The Bank of Canada aims to maintain inflation at a 1-3% range by adjusting interest rates. Higher oil prices and economic growth are generally positive for the Canadian Dollar, while weaker economic data can lead to a decline.
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