The U.S. dollar climbed back above C$1.40 against the Canadian dollar Monday, reversing part of last week’s decline as oil prices fell ahead of interest rate decisions by both countries’ central banks.
FXStreet put the exchange rate at C$1.4023 per U.S. dollar at 8:09 a.m. ET. Investing.com market data showed a Monday high of C$1.4027, after a Friday low of C$1.3968. The pair had fallen for seven straight sessions through Friday, when the Canadian currency was near a one-month high, as earlier EconoTimes coverage of the Canadian dollar’s gains reported.
Brent crude futures were down 1.35% at 8:39 a.m. ET, Reuters reported. FXStreet linked lower oil prices to pressure on the Canadian dollar. Bank of Canada research has found a relationship between oil and the currency, though the two do not consistently move together.
Oil’s effects extend beyond the exchange rate. The Bank of Canada’s third-quarter business survey found that high oil prices improved some firms’ outlooks for exports and investment. Roughly half of surveyed firms planned to pass along some or all of their increased costs from the Middle East conflict and tariffs to customers over the following 12 months.
Statistics Canada reported that consumer prices rose 3.1% from a year earlier in September, with gasoline prices up 27.8%. The Bank of Canada has said sustained oil and refining costs could spread inflationary pressure beyond fuel.
The bank held its overnight rate at 2.25% on Sept. 2. In a Reuters poll conducted Oct. 21-23, 19 of 34 economists expected a quarter-point increase to 2.50% this week. Reuters reported that an increase would be the bank’s first since July 2023.
The Federal Reserve raised its target rate range by a quarter-point to 3.75%-4% on Sept. 16 and said inflation remained elevated. The Bank of Canada is scheduled to announce its decision and release its Monetary Policy Report at 9:45 a.m. ET Wednesday; the Fed’s decision is due at 2 p.m. ET.
