The Canadian dollar (CAD) has shown resilience recently, rebounding in tandem with the U.S. dollar (USD) following an uptick in oil prices, which have added support due to Canada's status as a major oil exporter. As crude prices have surged, the loonie has experienced an uplift, reflecting its strong correlation with commodity prices. Yesterday, for instance, the CAD rallied in the evening after initially opening subdued, benefiting from oil’s recent rise.
Currently, CAD to USD is trading at 0.7308, reflecting a 1.7% increase above its three-month average of 0.7185. The currency has displayed a stable range, fluctuating between 0.6933 and 0.7369 over the last three months. Meanwhile, against the Euro, the CAD at 0.6366 is slightly below its average, but it has demonstrated consistent movements within a narrow band. The CAD is notably stronger against the British pound, achieving 30-day highs at 0.5444, above its three-month average, while it holds at 106.3 against the yen, up 1.9% from an average of 104.3.
Recent political and economic developments also factor into CAD's outlook. The anticipated leadership change with Mark Carney's expected appointment as Prime Minister, alongside rising trade tensions with the U.S., presents a volatile backdrop for Canadian currency. Analysts have noted that these dynamics could limit any significant upside for the CAD, especially amid ongoing uncertainties regarding U.S. trade policies.
The Bank of Canada’s decision to maintain the benchmark interest rate at 2.75% in April 2025 is another critical element supporting the Canadian dollar. This policy is seen as beneficial in attracting foreign capital, which strengthens the loonie further, while concerns over potential U.S. tariffs loom large over the economic landscape.
Oil's trajectory remains a key determinant for the CAD as well. Currently, oil is priced at $76.45 per barrel, significantly above its three-month average of $67.16, illustrating a robust correlation between oil prices and the CAD's performance. Strong oil prices typically bolster the Canadian economy and, consequently, its currency.
As events unfold in both domestic and international arenas, including developments in oil prices, trade relations, and monetary policy, they will have crucial implications on the future performance of the CAD. Keeping an eye on these factors will be essential for those engaging in international transactions involving the loonie.
