NEWS

Canadian dollar on the rise as U.S. greenback weakens

06/10/2015 12:37 EDT | Updated 06/10/2016 05:59 EDT
The Canadian dollar has been on tear the last three days, rising from just below 80 cents US on Friday to 81.56 cents US today, largely on the weakness of the U.S. currency.

The U.S. dollar weakened after reports from the G7 meeting last weekend that President Barack Obama saw the strong greenback as "a problem." Obama has denied he is talking down the dollar.

On Tuesday, the Canadian dollar was up half a cent at 81.53 at midday.

Encouraging the loonie's climb are rising commodity prices and Friday's upbeat jobs report, showing the Canadian economy added 59,000 jobs last month.

"Rising commodity prices and an improving domestic economic picture have helped to push the Canadian dollar higher along with some broad based US dollar weakness," said Knightsbridge FX currency trader Rahim Madhavji in a note to clients Wednesday.

However, the U.S. jobs report also showed strong growth, increasing the likelihood that the U.S. Fed will speak of raising interest rates at its June 17 meeting. That would strengthen the greenback and hit the loonie hard.

Oil and gold are up

The price of oil has risen in tandem with the Canadian dollar, with the West Texas Intermediate crude contract up 55 cents Wednesday to $60.68 US a barrel. Oil prices also are in recovery after sinking to the $57 range last week.

A report on U.S. energy production due out to today is expected to show slowing output, reinforcing the boost to crude prices.

Western Canada Select, the Canadian oilsands contract, rose 42 cents to $52.96, near its high for the year.

Heavy oil continues to be in demand because it suits existing refinery capacity. Oilsands companies in Alberta are putting production back online after being threatened by a forest fire.

Gold, a key Canadian commodity, has also bounced higher, up $11 a day to $1187 US an ounce.   

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