Canadian dollar heads for biggest monthly gain in a year on rate hike bets
The Canadian dollar strengthened against the U.S. dollar, heading for its largest monthly gain since April 2025, driven by expectations of potential interest rate hikes from the Bank of Canada amid elevated oil prices and inflation concerns. The currency's rise coincided with a weaker U.S. dollar, influenced by reported Japanese intervention in forex markets and shifting rate expectations. Despite a dip in oil prices on Thursday, earlier gains had reinforced speculation of tighter monetary policy in Canada later in the year.
- ▪The Canadian dollar rose 0.5% to 1.3610 per U.S. dollar, marking a 2.2% gain for the month.
- ▪The Bank of Canada indicated it might implement consecutive rate hikes if high oil prices continue to fuel inflation.
- ▪Investors expect a rate increase by July and anticipate two hikes by the end of 2026, according to swap market data.
- ▪Canada’s economy grew 0.2% in February, with first-quarter annualized growth estimated at 1.7%.
- ▪Oil prices dipped 2.3% to $104.41 a barrel but had recently reached a three-week high over Middle East supply concerns.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountThe Canadian dollar strengthened against its U.S. counterpart on Thursday and was headed for its biggest monthly advance since April 2025, as the greenback posted broad-based declines and investors weighed the potential for higher oil prices to lead to interest rate hikes in the coming months.The loonie was trading 0.5% higher at 1.3610 per U.S. dollar, or 73.48 U.S. cents, after moving in a range of 1.3604 to 1.3690. Since the start of the month, the currency has advanced 2.2%.“The CAD is getting a lift this morning from a slightly less dovish Bank of Canada and commodity strength, especially oil,” said Tony Valente, a senior FX dealer at AscendantFX.
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