The Canadian dollar held near an eight-week peak against the U.S. dollar on Monday as upward pressure on oil prices combined with stronger-than-expected employment figures for July.
The loonie was little changed at 1.3940 per U.S. dollar, equivalent to 71.74 U.S. cents, and traded within a session range of 1.3927 to 1.3964.
On Friday the currency briefly strengthened to 1.3923, its most robust intraday showing since June 10. That move followed data showing Canada added more jobs than anticipated in July.
Market positioning had shown an increase in bearish wagers against the Canadian dollar in the weeks leading up to the U.S. announcement of new tariffs on Canada, with speculators holding the heaviest short exposure to the loonie among major currencies.
Separately, diplomatic and trade discussions between Ottawa and Washington were reported to be ongoing. According to a source familiar with the talks, Canada and the U.S. are exploring a potential arrangement in which Ottawa would meet a list of trade demands from the Trump administration in return for Washington dropping the threat to impose fresh tariffs.
Energy markets also played a role in the currency's performance. Oil, a key Canadian export, settled 5.05% higher at $82.13 a barrel on Monday. The rise in crude followed exchanges over demands for compensation between Iran and the U.S., a development that reduced the likelihood of a deal to reopen the Strait of Hormuz.
Market context
The combination of firmer domestic employment data and a notable jump in oil prices supported the Canadian dollar's recent strength, while existing heavy short positions left the currency exposed to shifts in sentiment. Ongoing bilateral discussions over trade and the continued volatility in oil tied to geopolitical exchanges remain factors to watch.