Canadian dollar hits four-week high as market cheers Alberta remain vote
TLT•The Canadian dollar rose 0.5% to 1.4045 per U.S. dollar, reaching a four-week high after Alberta voted 76% to remain part of Canada. A narrower Canada-U.S. interest-rate gap and rising bets on a Bank of Canada rate hike also supported the currency.
1. Loonie strengthens
The Canadian dollar rose to 1.4045 per U.S. dollar, or 71.20 U.S. cents, after touching 1.4033, its strongest intraday level since September 22. The gap between Canada’s two-year yield and the U.S. equivalent narrowed to 146 basis points from about 160 earlier in the month.
2. Rate and vote catalysts
Swap market data indicated an 80% chance the Bank of Canada would raise its benchmark rate by 25 basis points to 2.50% on October 28. The remain side won 76% of votes in Alberta’s first referendum on separation. Canadian government bond yields fell across the curve, while U.S. crude futures slipped 0.9% to $102.75 a barrel.
