By S. Nicholas
The Canadian Dollar surged to a new 3 ½ year high against the greenback on Wednesday, boosted by higher oil prices as well as additional support from renewed demand for carry trades. Tuesday’s better than forecast inflation data also helped the Loonie strengthen. The annual inflation rate jumped top its highest level since September 2008, which will likely put more pressure on the Bank of Canada to raise interest rates soon.
USDCAD fell to 0.9496 towards the end of the European trading session on Wednesday and later rebounded to 0.9556 in the US session. The pair was unable to go beyond the low as it probably has been oversold.
TD Securities Chief Macro Strategist, David Tulk commented: “It rallied quite strongly into the early morning and then hit a wall.” He added: “I think it’s a sense of fatigue and probably the order book stacking up in such a way that a further sell-off in US dollar/Canada just wasn’t in the cards.”