C$ climbs to more than 3-1/2-year peak vs. US dollar

NEW YORK: The Canadian dollar rose on Monday to its highest level since mid-September 2017 against a broadly weak US currency, boosted overall by firmer commodity prices and the Bank of Canada beginning to tighten its monetary policy.

Analysts said those two factors had helped shield the Canadian dollar from the negative impact of the economy's worse-than-expected jobs report last Friday.

Canada's economy lost 207,100 jobs in April, more than analysts' estimates of 175,000 job losses, with declines driven by coronavirus restrictions in populous Ontario, Quebec and British Columbia, data showed.

"Easy money, rising growth and supply bottlenecks are pushing speculative money out of the US dollar and into the commodity complex," said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto. "Echoes of 2008-2009 are clear."

The Canadian dollar has rallied against the greenback since the BoC flagged last month that it could begin hiking interest rates in late 2022 and cut the pace of its bond purchases.

Since roughly mid-April, the loonie has gained nearly 5%.

In afternoon trading, the loonie rose 0.2% to C$1.2094 per US dollar, or 82.67 US cents, having earlier touched its strongest intraday level since September 2017 at C$1.2080.

The Canadian currency also rose as copper raced to a record peak on Monday as investors worried about missing out on further gains. Copper slipped in afternoon trading, however, as bullish investors who recently entered the surging market became nervous about a possible correction.

Three-month copper on the London Metal Exchange climbed to an all-time high of $10,747.50 a ton on Monday after breaking through a decade-old record on Friday.

"Traders are Gamestopping the Canadian dollar, bidding it in synchrony with soaring base metal prices," said Schamotta, referring to the US stock that was propelled by retail traders to record highs.

"The C$1.2000 threshold - a big and enticing round number - looms ahead, with a breakthrough looking more likely by the minute," he said.

Canadian government bond yields were little changed across the curve, with the 10-year up slightly at 1.515% from 1.5% late on Friday.