Canadian dollar heads for weekly gain as U.S. dollar retreats
The Canadian dollar was poised to end a five-week losing streak against the US dollar on Friday, buoyed by a retreat in the greenback and rising oil prices, as investors reassessed the outlook for US interest rates. The loonie traded around C$1.4170 per US dollar, or 70.57 US cents, in the latest market data during the morning session.
The US dollar had dropped about 0.13% against the Canadian currency that day. The US dollar's retreat has facilitated the Canadian currency's rebound after domestic employment data last week dampened expectations for a Bank of Canada rate increase, sending the loonie to an 18-month low. The US dollar was set for a weekly decline against major currencies after remarks from Federal Reserve Chair Kevin Warsh fueled expectations that policymakers could hold interest rates steady at their October meeting.
A weaker greenback can bolster the Canadian dollar by making it more affordable for investors to purchase the currency. Oil prices also provided support. Brent crude rose around 1.4% for the week to $106.28 a barrel, while U.S. West Texas Intermediate crude climbed 6.4% to $97.78, driven by concerns about Middle East supply disruptions and a sharp decrease in U.S. crude inventories.
Canada is a significant energy exporter, making the loonie sensitive to fluctuations in crude prices, although broader movements in the US dollar and interest-rate expectations can counterbalance the influence of oil. The US dollar-Canadian dollar exchange rate had slipped about 0.6% from its October 9 close of C$1.4257, positioning the Canadian currency for a weekly gain of approximately 0.6%.
This move would reverse the prior week's decline, when the loonie slipped 0.2% and recorded its fifth consecutive weekly loss. Investors were also scrutinizing recent US inflation signals after producer prices surged 1.3% in September, the biggest monthly increase in four-and-a-half years, fueling concerns that high energy costs could maintain inflationary pressures.
Written by urgent.news from Investing.com's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
