Loonie Surges on BoC Inflation Warnings
The Canadian dollar strengthened to its highest level in over a week against the US dollar on Thursday, building on its rebound from Tuesday's low. The loonie rose by 0.20% to C$1.3817 per U.S. dollar, according to live Investing.com data, after opening at 1.3844. This puts the currency at roughly 72.37 U.S. cents.
The move follows the Bank of Canada's decision on Wednesday to keep interest rates unchanged at 2.25% for a seventh consecutive meeting. While this was widely expected, Governor Tiff Macklem's emphasis on upside inflation risks and the impact of elevated energy prices and US tariffs on Canada's inflation outlook encouraged investors to bet that borrowing costs could eventually rise.
The commodity-linked Canadian dollar has also been supported by higher oil prices. Meanwhile, markets are weighing the narrowing interest-rate gap between Canada and the United States and the prospect that trade tensions between Ottawa and Washington could eventually ease.