The Canadian dollar remained stable against its U.S. counterpart on Monday, as robust domestic jobs data helped counteract uncertainty from international trade disputes. Investors are now turning their attention to a key inflation report that will influence the Bank of Canada’s upcoming interest rate decision.
The loonie traded nearly unchanged at 1.3693 per U.S. dollar, or 73.03 U.S. cents, after moving within a range of 1.3671 to 1.3716. The currency had touched a two-week low of 1.3731 on Friday.
Support for the Canadian dollar came from a surprisingly strong June jobs report, which showed the economy added significantly more jobs than anticipated. This positive data has led investors to reduce the probability of an interest rate cut by the Bank of Canada on July 30 from 27% to just 13%. Further positive news came on Monday, with data showing a 0.1% rise in wholesale trade for May, defying expectations of a 0.4% decline.
Analysts at Monex Europe noted that the strong employment figures are “helping to fend off any downside pressure stemming from U.S. tariff threats,” resulting in “choppy but largely directionless trading.”
The next major catalyst for the currency will be Canada’s Consumer Price Index (CPI) report for June, due on Tuesday. The annual inflation rate is expected to have risen to 1.9% from 1.7% in May. U.S. inflation data is also scheduled for release on the same day.
Meanwhile, trade uncertainty has bolstered the U.S. dollar against a basket of major currencies. U.S. President Donald Trump has recently threatened new tariffs on imports from Mexico, the European Union, and Canada, though goods covered by the continental trade pact may be excluded from the Canadian tariffs.
In the bond market, Canadian government bond yields rose, with the 10-year yield up 2.2 basis points to 3.524%, earlier reaching its highest point since January 15.
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