CAD surges on eased Covid-linked restrictions

The Canadian dollar strengthens 0.3% against its American counterpart on Tuesday. The CAD has touched its strongest level since June 13 at 1.2820.

Easing COVID-linked restrictions in China boosted the investors’ sentiment. Global shares were higher and the price of oil, one of Canada’s major exports, rose following China’s decision to ease some quarantine requirements for international arrivals, a move that raised hopes for stronger growth and a revival in demand for commodities.

US crude prices advanced 1.3% to $110.98 a barrel, while the Canadian dollar was trading 0.3% higher at 1.2844 to the USD, or 77.86 U.S. cents. The loonie was on track to decline 1.6% in June after global financial markets were rocked by recession fears. Canada’s GDP data for April, due to be released on Thursday, could offer clues on the strength of the domestic economy.

With the existing hot inflation, money markets expect the Bank of Canada to raise interest rates by three-quarters of a percentage point at its next policy decision on July 13, which would be its biggest hike in 24 years.