The Canadian dollar CADUSD strengthened against its U.S. counterpart on Monday as rising hopes that a global economic downturn can be avoided helped underpin commodity-linked currencies.
The loonie was trading 0.6% higher at 1.3172 to the greenback, or 75.92 U.S. cents, after moving in a range of 1.3152 to 1.3261. For the month of July, it was up 0.5%.
“Month-end investor flows are buying commodity currencies today,” said Michael Goshko, senior market analyst at Convera Canada ULC. “Last week’s solid U.S. data ... seems to have crystallized the ‘soft landing’ narrative, which would logically favor commodity currencies.”
On Thursday, a U.S. Commerce Department report showed the economy grew faster than expected in the latest quarter.
Canada is a major producer of commodities, including oil, which climbed to a three-month high on expectations that Saudi Arabia will extend voluntary output cuts into September and tighten global supply. U.S. crude oil futures settled 1.5% higher at $81.80 a barrel.
Other commodity-linked currencies, such as the Australian and New Zealand dollars , also posted solid gains.
Adding to tailwinds for the loonie, dock workers on Canada’s West Coast and their employers said they reached a new labor agreement, averting an immediate strike, as they sought to end a dispute that has disrupted operations at the country’s busiest ports.
Canada’s employment report for July is awaited on Friday for clues on the strength of the domestic economy. Economists forecast a 21,100 jobs gain.
Canadian government bond yields were lower across the curve, tracking moves in U.S. Treasuries. The 10-year eased 2.4 basis points to 3.496%.