Canadian Dollar Stabilizes Amid Commodity Price Surge and Interest Rate Speculations

The Canadian dollar remains stable against the U.S. dollar, balancing rising commodity prices with investor concerns over interest rate cut timings.

The Canadian dollar remained stable against the U.S. dollar on Tuesday, as rising commodity prices balanced out growing investor concerns over the potential timing of interest rate reductions.

The loonie hovered close to 1.3570 against the U.S. dollar, equivalent to 73.69 U.S. cents, fluctuating between 1.3557 and 1.3584 throughout the day.

This continues the recent trend of limited movement for the USD-CAD exchange rate.

Canadian Dollar Stabilizes Amid Commodity Price Surge and Interest Rate Speculations

Adam Button, the chief currency analyst at ForexLive, noted, “The market is on the lookout for a significant development in either the U.S. or Canadian economy to guide the next direction for USD-CAD. While we’ve seen a bit of strength in the U.S. dollar, it’s been offset by the rise in commodity prices.”

As a key producer of commodities such as gold, which recently reached a new all-time high, and oil, Canada’s currency often reflects changes in these markets. U.S. crude oil futures saw a 1.7% increase, closing at $85.15 a barrel, amid disruptions to oil supplies due to Ukrainian strikes on Russian energy infrastructure.

Meanwhile, major indexes on Wall Street fell as strong recent economic indicators cast doubt on the Federal Reserve’s plans to cut interest rates three times this year.

While the Bank of Canada is also anticipated to start reducing interest rates within the year, it’s not expected to announce such measures in its upcoming policy statement.

The forthcoming jobs report for March, scheduled for release on Friday, might shed light on the Canadian economy’s condition, with analysts predicting a 25,000 job increase.

“With several important data releases coming up, I’m expecting increased volatility as the week progresses,” Button remarked.

In the bond market, Canadian government bond yields saw an uptick across the board, in line with movements in U.S. Treasury yields. The yield on the 10-year bond rose by 3.2 basis points to 3.620%, reaching a peak of 3.678% earlier in the day, the highest since February 13.

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