The Canadian dollar has been on a rather large positive move over the last two weeks. It has been able to gain back virtually all of the losses over the last few months. That’s pretty amazing since most of those gains came over 5 days of gains.
The loonie is outperforming 16 other currencies against the US dollar making it the best performing currency currently out there. The reason for this is that oil’s climatic drop has stopped and there is a lot of optimistic news coming out about the Canadian economy. Even businesses are looking to make money in the future, so things are looking at least positive in Canada.
July 22 (Bloomberg) — Canada’s dollar traded near the strongest in more than five weeks as U.S. stocks and crude oil, two of its main drivers, swung between gains and losses.
The loonie, as the currency is called for the aquatic bird on the dollar coin, is the best performer versus the U.S. dollar among the 16 most-traded currencies so far this month. In June it was the laggard. It tends to rise and fall with stocks and commodity prices as a proxy for investors’ appetite for risk.
“Commodity currencies are starting to lose momentum,” said Ian Stannard, a currency strategist in London at BNP Paribas SA, France’s biggest bank. “Caution with long positions is currently the way to play things.” A long position is a bet a currency will rise.
The Canadian currency appreciated 0.3 percent to C$1.1001 per U.S. dollar at 4:43 p.m. in Toronto, compared with C$1.1037 yesterday. It touched C$1.0951, the strongest since June 11, after falling earlier as much as 0.5 percent. One Canadian dollar buys 90.90 U.S. cents.
“A daily close below C$1.0920 is needed to accelerate U.S. dollar losses,” CIBC World Markets analysts Shane Enright in Toronto and Adam Fazio in New York wrote in a note to clients today. The recent U.S. dollar declines “favor an eventual move” toward C$1.0590, they wrote.
Crude oil for September delivery fell 0.5 percent to $65.31 a barrel in New York after tumbling as much as 2.8 percent and rising as much as 0.2 percent. Raw materials including oil account for more than half of Canada’s export revenue.
