The Canadian dollar continued its trend of setting overnight highs against the US dollar reaching 1.3177 last night. The Canadian dollar gained strength against the US dollar due to the broad weakness of the USD. Over the weekend and into Monday, the US dollar had initially strengthened as a result of the chaotic and short-lived armed rebellion in Russia, but it relinquished most of its gains today.
Furthermore, the Canadian dollar is benefiting from a recent breakthrough of a key technical support level at 1.3260. A technical support level refers to a price point at which buying interest has historically increased, creating enough demand to “support” or halt the price from further decline. Since the Canadian dollar has surpassed this technical support level, it is expected to gain further against the USD until it reaches its next technical support level. Currently, the Canadian dollar is trading at 1.3176.
Overall, the Canadian dollar continues to benefit from interest rate differentials in comparison to the US dollar. With the Federal Reserve on hold and the Bank of Canada surprising the markets with an additional 0.25 basis points increase in June, and another rate hike in July appearing highly likely, it is shaping up to be a promising summer for the Canadian dollar.
