Canadian dollar hits six-week high of C$1.3955 as oil stokes inflation concerns
In brief
- Canadian dollar hit a six-week high of C$1.3955 per U.S. dollar, per Reuters via Crypto Briefing.
- The Canadian dollar was up 2% for the month after the move.
- Rising oil prices drove the gains and heightened inflation concerns, the report said.
- Bank of Canada recently hiked 25 basis points to 2.5%, Crypto Briefing said.
- CPI and jobs data are in focus ahead of the December rate announcement.
Oil is doing the heavy lifting
Energy is the driver here. Crypto Briefing reported that the loonie's monthly gains came on the back of rising oil prices, and that same move is feeding Canada's inflation story. The outlet said higher energy costs have added to broader inflationary pressures that could prompt the Bank of Canada to consider further rate hikes.
That's market speculation, not a stated plan. The report doesn't carry any comments from the central bank's officials, so it's best read as a view on where rates could go rather than a commitment from policymakers.
The Bank of Canada's last move
According to the same Crypto Briefing report, the Bank of Canada recently raised its policy rate by 25 basis points to 2.5% (that rate level comes from the outlet's reporting). The bank cited energy prices as a significant factor in inflation risks when it made the move, the report said.
It's the same oil story on both fronts.
Crude shows up in the currency's gains and in the bank's own read on inflation risks.
What markets are watching next
Observers will watch statements from Governor Tiff Macklem and Senior Deputy Governor Carolyn Rogers for signals on future policy, the report said. Neither official is quoted in it.
The data calendar matters too. Upcoming CPI and employment reports could provide further evidence on inflation trends and could influence the bank's decision, per Crypto Briefing. The outlet added that any developments in oil prices or global economic conditions could affect market expectations for the Bank of Canada's December rate announcement.
So where does that leave the loonie? The report doesn't put a number on oil or offer a forecast for the currency. What it does lay out is a two-step picture: rising oil drove the Canadian dollar's gains and heightened inflation concerns, and those higher energy costs could prompt the Bank of Canada to consider further hikes.
