The Canadian dollar strengthened on Tuesday thanks to positive real estate market numbers and higher energy prices. The loonie also bounced back against its US counterpart on the threat of an economic collapse in Turkey that could seep into other emerging markets.
Crude oil prices surged after Saudi Arabia, one of the worldâs biggest energy producers and recent foe of Ottawa, announced it would be cutting output levels, leaving many investors concerned of a global supply glut. September West Texas Intermediate (WTI) crude futures tacked on $0.71, or 1.06%, to $67.91 per barrel. October Brent crude futures also swelled $0.75, or 1.02%, to $73.35 a barrel.
On the economic front, the nationâs home prices surged in July in most parts of the country, notes the Teranet-National Bank Composite House Price Index data. But there was some pause by investors after the price increases were found to be smaller compared to historical averages for the month.
The next piece of economic news will be June manufacturing sales data on Thursday and July inflation numbers on Friday.
Experts think that the loonie, which is a global currency that is exposed to international trends and developments, could face some volatility in the coming weeks, stemming from the financial crisis unfolding in Turkey. Since traders are transitioning away from commodity-based export currencies, the loonie could come under short-term pressure.
Another key for the loonieâs direction will be the latest round of re-negotiations pertaining to the North American Free Trade Agreement (NAFTA). Ottawa was not invited to participate in US-Mexico deliberations, and President Donald Trump has made it clear that he prefers a deal with Mexico first and Canada later.
The Canadian dollar is benefiting from a string of bullish statements from the Bank of Canada (BOC), which is anticipated to raise interest rates next month.
Canadian government bond yields dipped as the two-year note fell to 2.114% and the 10-year note slipped to 2.306%.
The USD/CAD advanced 0.4% to 1.3086, from an opening of 1.3077, at 15:40 GMT. The EUR/CAD tumbled 0.69% to 1.4882, from an opening of 1.4984.
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