Loonie Steadies Near Eight-Week High Amid Oil Price Surge

The Canadian dollar has steadied near an eight-week high against its US counterpart on Monday. The loonie was trading at around 1.3940 per US dollar, or 71.74 US cents.

This comes as oil prices climbed by 5.05% to $82.13 a barrel, following Iran and the US trading demands for compensation that dimmed prospects for a deal to reopen the Strait of Hormuz.

Amo Sahota, director at Klarity FX in San Francisco, attributed the loonie's recent gains to its strong jobs report on Friday. The data showed Canada's economy adding many more jobs than expected in July, helping the currency touch its strongest intraday level since June 10.

The Canadian dollar has been boosted by recent employment data and higher oil prices, but investors globally have worried that higher energy prices could worsen the inflation outlook, leading to tighter monetary policy from central banks, including the Bank of Canada. This is evident in the rise of Canadian bond yields, which moved higher across the curve.