The Canadian dollar strengthened beyond 1.37 per US dollar, outperforming its G7 peers and reaching a near one‑month high, as surging energy prices and signs of a cooling US labor market reshaped the North American monetary backdrop. The loonie’s appreciation is being driven primarily by a jump in WTI crude oil prices above $92 per barrel, which has boosted foreign currency inflows into Canada’s energy‑intensive economy.
Additional support came from the closure of the Strait of Hormuz, which underscored Canada’s role as a secure energy supplier to the United States. The Bank of Canada has also underpinned the currency by holding its policy rate steady at 2.25% since January in an effort to tackle sticky headline inflation of 2.3% and an unemployment rate of 6.5%, signaling a still‑tight labor market.
In contrast, the Federal Reserve is now under growing pressure to deliver rate cuts in July, after the unexpected loss of 92,000 US jobs weighed on the dollar index. The Bank of Canada’s firmer stance, relative to the Fed, provides a yield advantage for the loonie and helps offset concerns related to the proposed 10% US import tariff.
