Loonie Bounces Back as Oil Prices Rise Amid US-Iran Tensions

The Canadian dollar rebounded on Monday from its two-week low against the US dollar as oil prices rose and investors executed month-end hedging transactions. The loonie traded 0.3% higher at 1.3855 per U.S. dollar, or 72.18 U.S. cents.

Noah Buffam, an FX strategist at CIBC Capital Markets, attributed the rally to a combination of month-end hedging flows and a small uptick in oil prices. He noted that investors often execute currency transactions around the end of the month to manage changes in their foreign exchange exposure due to portfolio movements.

The price of oil rose after the resumption of military action between the US and Iran rekindled market concerns about global supply disruption. U.S. crude oil futures were trading 2.8% higher at $85.72 a barrel.