The Canadian dollar CADUSD was little changed against its U.S. counterpart on Tuesday, with the currency holding near its highest level in more than one week as dovish comments from Federal Reserve policymakers bolstered investor sentiment.
Wall Street rallied and the U.S. dollar lost ground against a basket of major currencies as Atlanta Fed President Raphael Bostic said the U.S. central bank does not need to raise interest rates any further.
“When we see that change in the market’s perspective on possible interest rate hikes we are seeing the Canadian dollar really benefit from that,” said Darren Richardson, chief operating officer at Richardson International Currency Exchange Inc.
The Canadian currency was trading nearly unchanged at 1.3595 to the greenback, or 73.56 U.S. cents, after touching its strongest intraday level since Oct. 2 at 1.3570.
Canada is a major producer of commodities, including oil, so the loonie tends to be sensitive to shifts in investor sentiment.
U.S crude oil futures fell 0.4% to $86.06 a barrel as worries about weaker demand offset the potential for supply disruptions amid military clashes between Israel and the Palestinian Islamist group Hamas.
Stronger-than-expected Canadian employment data has added to support for the loonie, Richardson said.
Canada’s economy added 63,800 jobs in September and wages continued to soar, data on Friday showed.
Still, separate data on Friday, from the U.S. Commodity Futures Trading Commission, showed that speculators have raised their bearish bets on the loonie. As of Oct. 3, net short positions had increased to 40,151 contracts.
Canadian bond yields were lower across a flatter curve, tracking moves in U.S. Treasuries, as bond markets both sides of the border reopened after they were closed on Monday for a holiday. The 10-year eased 15.5 basis points to 4%. (