Canadian Dollar Reaches Three-Week High as Risk-On Trade Continues

Canadian Dollar Hits Three-Week High Against US Counterpart

The Canadian dollar strengthened to a three-week high against its US counterpart on Wednesday, as the greenback continued to give back its recent safe-haven gains and domestic data showed increases for factory sales as well as for wholesale trade.

The loonie was trading 0.3% higher at 1.3727 per US dollar, or 72.85 US cents, marking its strongest intraday level since March 24. This gain comes as the US dollar weakened for an eighth straight day against a basket of major currencies.

Domestic data released on Wednesday showed a 3.6% increase in factory sales in February compared to January, driven by higher sales of motor vehicles and machinery. Wholesale trade also rose by 2% in February.

In other economic news, Canadian bond yields moved higher across the curve, tracking moves in US Treasuries. The 10-year bond yield was up 4.8 basis points at 3.478%.

| Currency Pair | Change | Rate | | --- | --- | --- | | CAD/USD | 0.3% | 1.3727 | | CAD/USD (Intraday High) | - | 1.3727 | | US 10-Year Bond Yield | Up 4.8 basis points | 3.478% |

The Canadian dollar's gain is attributed to the decline in the US dollar's safe-haven premium, which has largely evaporated in the wake of the recent developments in the Middle East. The US dollar's war premium has been a significant factor in its recent strength, but with the situation stabilizing, investors are becoming more risk-tolerant.

The price of oil, one of Canada's major exports, settled one cent higher at $91.29 a barrel, but remains below its peak levels in recent weeks. Despite this, the market is taking a more positive view of the situation, with investors believing that global growth will not be significantly impaired by the conflict.