Loonie Bounces Back from Two-Week Low on Rising Oil Prices

The Canadian dollar has rebounded from its two-week low, helped by rising oil prices and month-end hedging flows. The loonie climbed to around C$1.3911 per U.S. dollar earlier in the session before recovering to its current level of about C$1.389 per USD.

The increase in oil prices is attributed to renewed U.S.-Iran military tensions around the Strait of Hormuz, which have raised concerns about global oil supplies. As a result, crude prices have risen above $90 a barrel, boosting Canada's currency due to its large energy-exporting sector.

However, the loonie's gains remain limited as markets increased bets that the Federal Reserve could raise interest rates in September. This has supported U.S. Treasury yields and the dollar, weighing on the Canadian currency.