The Canadian dollar rose to its highest level in two months on Tuesday, driven by a sharp increase in global crude oil prices. The currency traded at around 1.3920 Canadian dollars per U.S. dollar (about 71.84 U.S. cents) and briefly touched its strongest intraday level since June 10.
The appreciation came as crude oil prices continued to climb amid geopolitical tensions and concerns over global energy supplies. Since Canada is a major exporter of crude oil, higher oil prices generally improve the country's export earnings and provide support to the Canadian dollar.
Despite the gains, the currency's advance remained modest because investors are waiting for the latest U.S. Consumer Price Index (CPI) data. The inflation report is expected to provide fresh clues on the U.S. Federal Reserve's future interest rate decisions, which could significantly influence global currency markets.
Analysts noted that while stronger oil prices are benefiting the Canadian currency, broader market sentiment remains cautious due to uncertainty surrounding U.S. monetary policy and ongoing geopolitical developments in the Middle East.
Currency traders are also closely monitoring developments in energy markets, as sustained increases in crude oil prices could provide additional support to the Canadian dollar in the coming weeks. However, any major shift in U.S. inflation or interest rate expectations could alter the currency's direction.
