TORONTO – The Canadian dollar rallied on Friday, recouping its weekly decline against the greenback, after U.S. Federal Reserve Chair Jerome Powell signaled the possibility of interest rate cuts and Ottawa made a move to ease trade tensions with Washington.
The loonie climbed 0.7% to 1.3815 per U.S. dollar, or 72.39 U.S. cents, its largest one-day gain since May 23. The move helped offset earlier weakness that had left the currency little changed on the week.
On Tuesday, cooler-than-expected Canadian inflation data pressured the loonie, fueling bets that the Bank of Canada could resume its easing cycle later this year. Analysts say that divergence between the Fed and the BoC remains a key driver for the currency outlook.
Meanwhile, domestic data offered some support: retail sales rose 1.5% in June, pointing to underlying resilience in household spending despite higher borrowing costs. Canadian bond yields slipped across the curve, tracking U.S. Treasuries as investors repositioned for looser monetary policy.
Traders now see the loonie caught between global rate expectations and domestic economic signals, with further direction likely to hinge on next week’s U.S. economic data and BoC commentary.
