The Canadian dollar rose to its highest level in nine days on Thursday as the U.S. dollar weakened against many major currencies. Investors were also waiting for Canada’s GDP report, which could give clues about whether the Bank of Canada will cut interest rates again.
The U.S. dollar dropped to its lowest point in three years after reports said President Donald Trump had thought about replacing Federal Reserve Chair Jerome Powell by September or October. This news made investors question the stability of U.S. monetary policy.
U.S. GDP data also added pressure, showing the economy shrank by 0.5% in the first quarter—worse than earlier estimates.
“This move is all about the weaker U.S. GDP and the Powell story,” said Amo Sahota from Klarity FX. “If Canadian GDP looks good tomorrow, we might see the U.S. dollar fall even more against the loonie.”
On Thursday, the Canadian dollar gained 0.7%, trading at 1.3625 per U.S. dollar, or about 73.39 U.S. cents. That was its biggest one-day jump since May 23. It also briefly hit 1.3619, the strongest level since June 17.
Canada’s GDP report for April, expected Friday, is forecast to show no growth from March. On Thursday, early data showed that wholesale trade fell 0.4% in May, which supports signs that the Canadian economy is slowing down.
Investors believe there’s about a 40% chance the Bank of Canada will cut interest rates again on July 30.
Meanwhile, oil—one of Canada’s main exports—rose 0.5% to $65.24 per barrel. Canadian bond yields also fell, following similar moves in U.S. bonds. The 10-year Canadian bond yield dropped by 3.8 basis points to 3.323%.
