The value of Canada's dollar is near 79 cents U.S. for the first time since 2018 as higher oil prices lift the loonie.
The Canadian dollar was changing hands at 78.95 cents U.S. late on Tuesday, its highest level since April 2018. The catalyst for the move was the higher price of a barrel of oil, as the Organization of the Petroleum Exporting Countries (OPEC) agreed to not flood the market with cheap oil in the first quarter of 2021.
The price of a barrel of the North American oil benchmark known as West Texas Intermediate gained almost 5% to trade above $50 U.S. a barrel after Saudi Arabia and Russia avoided a breakdown of their deal to limit supply.
Oil also got a boom from data out of the U.S. that showed manufacturing activity rose to its highest level since 2018. A healthy manufacturing sector suggests the economy is recovering, which should increase demand for oil.
As is often the case, the Canadian dollar rode the wave of higher oil prices to new highs. After bottoming in March 2020 below 69 cents U.S., the Canadian dollar has risen steadily ever since.
The start of the calendar year is often a strong time for the U.S. dollar, but that isn't happening this year. After spending most of 2020 running for the safe haven of U.S. dollars, investors are starting to find their appetite for risk again, including in cryptocurrencies.
