The Canadian dollar surged to a 10-day high on Monday. This came as oil prices climbed and investors reassessed the potential outcomes of the upcoming U.S. elections. The loonie was up by 0.4% against the U.S. dollar, trading at 1.3895, or 71.97 U.S. cents. It reached its strongest point since October 25, touching 1.3876.
The rise of the Canadian dollar comes amid a growing uncertainty around the U.S. elections. As investors start recalibrating their expectations, the loonie benefits from the shift. Oil prices, which are crucial to Canada’s economy, also supported the Canadian dollar.
The upcoming U.S. presidential elections have become a focal point. Former President Donald Trump, running neck and neck with Vice President Kamala Harris, has proposed significant changes to U.S. trade policies. These could affect U.S.-Canada trade relations, especially concerning tariffs. If Trump wins, tariffs on Canadian exports could rise, putting pressure on the Canadian dollar.
The shift in sentiment about a possible Republican sweep has led to higher bets on the loonie. Experts note that any potential tariff hikes would increase U.S. inflation, making it less likely the Federal Reserve will cut interest rates soon.
Oil prices are another key factor. They rose by 2.85% on the same day, closing at $71.47 per barrel. This is directly linked to a decision by OPEC+ to delay a planned output increase. As a major oil exporter, Canada benefits when oil prices go up. Hence, rising oil prices give the Canadian dollar a lift.
At the same time, the U.S. dollar fell against other major currencies. This was due to speculation surrounding the election results. Investors have been adjusting their positions, with many unwinding bets that Trump would win the presidency. This shift has had a ripple effect, further strengthening the Canadian dollar.
A potential disruption at the Port of Vancouver could also add to market volatility. If workers are locked out, it may hurt Canadian exports, including coal, potash, and beef. This situation could further impact the Canadian dollar, depending on how the market reacts to the news.
Looking ahead, these include the outcome of the U.S. election and whether oil prices continue to rise. Investors are also waiting for the Federal Reserve’s interest rate decision later this week.
For further insights on related topics, visit our Prex Blogs
The Canadian dollar has risen to a 10-day high amid oil price gains and growing uncertainty around the U.S. election.
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