Loonie Hits Two-Month High as Oil Prices Soar and Labor Data Strengthens

The Canadian dollar has reached its strongest level in two months, hitting a high of around 1.3920 per US dollar on Tuesday.

This gain is attributed to the strong labor report released in July, which saw 75,100 jobs added and unemployment at a two-year low, as well as higher crude oil prices.

The energy sector plays a significant role in Canada's economy, making oil prices a crucial factor in determining the value of the Canadian dollar.

The rise in oil to around $83.16 a barrel has improved Canada's 'terms of trade', allowing it to earn more for its exports and boosting the currency.

However, analysts note that the near-term direction of the loonie may be influenced by broader US dollar movements and upcoming events such as Wednesday's consumer price index report and potential tariff announcements from President Trump.