The Canadian dollar CADUSD rose to its highest level in more than three weeks against its U.S. counterpart on Friday and was headed for its second straight weekly gain as recent volatility in global financial markets continued to subside.
The loonie was trading 0.3% higher at 1.2730 to the greenback, or 78.55 U.S. cents, after touching its strongest since May 5 at 1.2729. For the week, the currency was on track to advance 0.8%.
“The risk mood is clearly a big driver of the CAD’s performance but firm commodities and modestly supportive (interest rate) spreads are perhaps adding to CAD tailwinds,” strategists at Scotiabank, including Shaun Osborne, said in a note.
World stocks rose and eyed their first weekly gain in eight on a more upbeat earnings view and after this week’s Federal Reserve minutes dampened fears of mega-high interest rates.
The price of oil, one of Canada’s major exports, edged lower but was also on track for a weekly gain, supported by the prospect of a tight market due to rising gasoline consumption in the United States and also the possibility of a European Union ban on Russian oil.
U.S. crude futures were down 0.6% at $113.40 a barrel.
Gains for the loonie came ahead of a Bank of Canada interest rate decision next Wednesday. The central bank is expected to hike by half a percentage point for a second straight meeting to tackle soaring inflation.
Canadian government bond yields were mixed across the curve. The 10-year edged half a basis point higher to 2.799%, after touching on Wednesday a four-week low at 2.743%.
Be smart with your money. Get the latest investing insights delivered right to your inbox three times a week, with the Globe Investor newsletter. Sign up today.