Terminal rate bets help lift Canadian dollar to 9-month high

Toronto, June 17 (BNA): The Canadian dollar rose to a nine-month high against its US counterpart on Friday as oil prices rose and investors reset bets on a peak interest rate level this cycle from the Bank of Canada and the Federal Reserve. .

The Canadian dollar was trading up 0.2% at 1.3195 per dollar, or 75.79 US cents, after touching its strongest intraday level since September at 1.3189. Over the course of the week, it rose 1.1 percent, its third consecutive week of gains, Reuters reported.

“There seems to be more uncertainty in terms of final rates and that seems to be a very important driver for the Canadian dollar at this point,” said Bipan Rai, global head of forex strategy at CIBC Capital Markets.

The Fed on Wednesday expected two more rate hikes, which would bring its policy rate to the 5.50%-5.75% range, but money markets are pricing in just one more move.

Meanwhile, investors expect the Bank of Canada’s benchmark interest rate to peak at around 5.10% this year, up 32 basis points from the beginning of June. Last week, the Bank of Canada tightened 25 basis points to 4.75%, its first move since January.

“We are looking only below the (USDCAD) support at 1.3220,” Alrai said. “I think if we can get a weekly close below 1.32, that is very beneficial and will probably set us up for a rush towards the 1.30 region over the coming weeks.”

Rising oil prices, on Chinese demand and OPEC+ supply cuts, added support to the Canadian dollar. US crude oil futures rose 0.4% to $70.92 a barrel.

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Canadian government bond yields rose across the curve, tracking moves in US Treasuries. And the 10-year rose 3.8 basis points, at 3.372%.

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