Canadian Dollar Hits 72.8 US Cents as $4 Billion Treasury Buybacks Weaken Greenback
Updated
Updated · Financial Post · Aug 21
Canadian Dollar Hits 72.8 US Cents as $4 Billion Treasury Buybacks Weaken Greenback
3 articles · Updated · Financial Post · Aug 21
Summary
72.8 US cents marked the loonie’s weekly peak before it eased to about 72.64 on Friday, extending a more than 2.6% rebound from June lows near 70 cents.
US$4 billion in longer-dated Treasury buybacks—double the prior US$2 billion pace—was the main driver, strategists said, because it weakened the U.S. dollar more than the tentative U.S.-Canada trade deal did.
Canadian second-quarter rebound signals and higher oil also supported the currency, with Brent topping US$93.5 a barrel and WTI reaching US$86.54 as Middle East tensions flared again.
Trade optimism may fade quickly: analysts said CUSMA still faces rolling annual reviews, while Section 232 tariffs on Canadian steel, aluminum and autos would remain even under a new deal.
100-plus basis points of Canada-U.S. rate disadvantage and weak productivity leave the loonie carrying a structural risk discount, limiting chances of a sustained rally.