Canadian Dollar Hits Near 3-Month High on Oil Surge and Trade Optimism

The Canadian dollar strengthened against its U.S. counterpart on Thursday, reaching its highest level in nearly three months as rising crude oil prices and optimism surrounding trade negotiations provided significant tailwinds.

The loonie traded 0.1% higher at 1.3790 per U.S. dollar, or 72.52 U.S. cents. During the session, it touched an intraday high of 1.3757, a level not seen since May 21.

Key Catalysts

A primary driver for the commodity-linked currency was a sharp increase in the price of oil, one of Canada's major exports. U.S. crude oil futures climbed 2% to trade at $87.50 per barrel after U.S. President Donald Trump warned of potential retaliation against nations supporting Iran.

Investor sentiment was also buoyed by ongoing trade discussions. Top negotiators from Canada and the United States met in Washington for a second consecutive day, fueling hopes for a resolution that could ease months of retaliatory tariffs.

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U.S. Dollar Weakness and Market Backdrop

The Canadian dollar's advance was also supported by broader weakness in the U.S. dollar. According to Darren Richardson, chief operating officer at Vantry Capital Inc., concerns over mounting U.S. government debt contributed to the greenback's softness.

These concerns were underscored by a Treasury Department announcement on Wednesday that total U.S. public debt had surpassed $40 trillion for the first time. In fixed-income markets, Canadian bond yields rose during the session.