Loonie hits 2-month high above 78 cents US before slipping back
Loonie's 7-day string of gains against U.S. counterpart is longest since December 2012
The Canadian dollar briefly topped the 78-cent US level Tuesday as the U.S. dollar fell against many currencies and oil prices continued their recent rebound. But it lost some of that gain later in the session.
The loonie traded as high as 78.12 cents US in early trading, up more than two-thirds of a cent from Monday's close. But it slipped back to close at 77.80 cents US — still up almost two-fifths of a cent.
That marks the seventh straight trading session in which the Canadian dollar has gained against its U.S. counterpart. According to Bloomberg, that's the loonie's longest winning streak since December 2012.
The loonie's big early gain was trimmed after the release of a number of economic reports in Canada and the U.S.
Statistics Canada said manufacturing sales in June rose by a better than expected 0.8 per cent. The U.S. Federal Reserve reported that factory output rose by 0.5 per cent in July — its best performance so far this year — and U.S. home construction last month climbed to a six-month high.
A rise in crude oil futures above $46 US a barrel was credited as being one of the drivers of Tuesday's Canadian dollar gain. But the loonie also rose because the U.S. dollar was broadly weaker following influential calls for the Fed to take a cautious approach when it comes to raising interest rates.
The September crude oil futures contract settled at $46.58 US, up 84 cents. The benchmark contract hasn't closed above the $46 level since July 12. Oil prices have risen almost $5 US in the last six days.
"Oil prices and the outlook for relative central bank policy are providing for continued [Canadian dollar] strength," said a morning commentary from Scotiabank foreign exchange.
"The [U.S. dollar] is weakening broadly, ... falling materially against all of the G10 currencies as market participants respond to Monday's cautious commentary from San Francisco Fed President [John] Williams in which he called for a critical reassessment of prevailing policy frameworks."
The Canadian dollar last closed above 78 cents US on June 23.
Despite the loonie's impressive rise of the past few months — it has gained almost 10 cents since January — many analysts don't see the current strength lasting.
CIBC World Markets, for instance, sees the loonie at 74 cents US by December, while TD Economics sees the dollar at 75 cents US by year-end.
With a file from the Canadian Press