The Canadian dollar advanced to its highest level in more than a week on Thursday, climbing 0.20% to C$1.3817 per U.S. dollar after opening at 1.3844.
The currency traded in a range between 1.3813 and 1.3848, roughly equivalent to US$0.7237. Earlier in the week, the loonie had weakened to 1.3939 per U.S. dollar on Tuesday, marking its lowest point since August 13.
The Bank of Canada maintained its policy interest rate at 2.25% for a seventh consecutive meeting, keeping borrowing costs unchanged while highlighting intensifying inflation risks. Governor Tiff Macklem underscored upside risks to inflation, suggesting that investors should consider higher policy rates in the future. The central bank also pointed to the impact of elevated energy prices and U.S. tariffs on Canada’s inflation outlook.
Rising oil prices provided additional support to the Canadian dollar, which is closely tied to commodity markets. Investors also weighed the narrowing gap between Canadian and U.S. interest rates against the potential easing of trade tensions between Ottawa and Washington.
Analysts surveyed by Reuters expect the Canadian dollar to weaken modestly to 1.39 per U.S. dollar within three months, before strengthening to 1.36 in 12 months, contingent on reduced trade frictions between the two countries.
