The Canadian Dollar is showing strength, trading near 1.3560 against the US Dollar. The Loonie is benefiting from positive domestic labour data, firm commodity prices (specifically oil), and shifting monetary policy expectations, all contributing to its attractiveness relative to the US Dollar. Meanwhile, weakness in the US Dollar stemming from softer US labor indicators and reports of Chinese regulators advising banks to reduce Treasury exposure provides further support.
- The Canadian dollar firmed toward 1.356 per US dollar, closing in on 16 month highs.
- January labour data pushed the unemployment rate down to 6.5%, the lowest since September 2024.
- Firmer full-time employment and wage growth near 3.3% weakened the case for near-term Bank of Canada easing.
- Broad US dollar softness followed weaker US labour indicators.
- Reports that Chinese regulators advised banks to curb Treasury exposure weighed on the DXY and eased external pressure on the loonie.
- Oil prices increased, further supporting the currency by improving Canada’s terms of trade and export revenues.
- A shift in the Bank of Canada monetary policy expectations could provide some support to the Canadian Dollar against the Greenback.
- Traders await the US Retail Sales data later on Tuesday, ahead of the delayed US employment report for January.
The Canadian Dollar is experiencing upward momentum, driven by a confluence of factors. Positive economic data within Canada is strengthening its position, while concurrent weakness in the US Dollar further enhances its relative value. Commodity prices, particularly oil, provide additional support. The Loonie may continue to benefit if these trends persist.