Canadian Dollar Rises to Nearly Two-Week High
The Canadian dollar strengthened to its highest level in almost two weeks against its American counterpart, buoyed by a ceasefire agreement between the U.S. and Iran that has improved investor sentiment.
According to a report by Ukrinform, the Canadian dollar saw a 0.3% increase, reaching 1.3850 per U.S. dollar (72.20 American cents), marking its highest intraday level since March 26 at 1.3825. Meanwhile, the U.S. dollar index experienced a sharp decline against a basket of major currencies.
The news of the ceasefire has had a positive impact on major Wall Street indices, which are approaching monthly highs. However, oil prices have fallen by 16%, now standing at $94.85 per barrel.
Karl Schamotta, the chief market strategist at Corpay, noted that the strengthening of the Canadian dollar is linked to an improved appetite for risk and favorable borrowing conditions. He also pointed out that the Canadian currency's role as a 'petro' currency has significantly diminished over the past few years, with investment prospects in Canada's energy sector remaining limited.
The drop in oil prices has also tempered expectations for a tighter monetary policy from the Bank of Canada. Currently, the market is pricing in about one interest rate hike this year, down from previous expectations of two.
Additional signals for the market may come from the Canadian employment report for March, which is set to be released on Friday. Economists are forecasting an increase of 15,000 jobs following a reduction of 84,000 in February.
At the same time, Canadian bond yields have decreased along the curve, tracking movements in U.S. Treasury bonds. The yield on 10-year bonds fell by 6.5 basis points to 3.422%, after previously reaching its lowest level since March 18 at 3.385%.
As reported by Ukrinform, the U.S., Israel, and Iran have agreed to a two-week mutual ceasefire and the reopening of commercial shipping through the Strait of Hormuz.
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