Canadian dollar extends daily winning streak as interest rate spreads narrow
TLT•The Canadian dollar rose 0.3% to 1.4007 per U.S. dollar, its strongest intraday level since September 21, as oil prices climbed and the U.S.-Canada two-year yield spread narrowed by 11 basis points to about 141 basis points.
1. Dollar reaches one-month high
The Canadian dollar strengthened to a one-month high on Thursday and was on course for a sixth straight day of gains, which would be its longest winning streak since April. Strategist Kevin Ford said the narrowing yield spread reduced the U.S. dollar’s rate advantage, while elevated oil prices supported Canada’s terms of trade.
2. Rate and oil factors
U.S. crude futures rose 2.2% to $99.26 a barrel after Houthi attacks in Saudi Arabia raised concerns about energy supply disruptions. Investors see roughly a 75% chance that the Bank of Canada will raise its benchmark rate by 25 basis points to 2.50% next Wednesday. Canadian retail sales data for August is due Friday; analysts expect a 1.3% rebound after a 0.7% decline in July.
