Monday, the Canadian dollar surged up to near a 5-week high against the yen and a 4-day high against the euro as crude oil rose today after China pledged to make its currency more flexible.
The Canadian dollar also jumped to near a 6-week high against the US currency at 3:35 am ET, but the pair moved sideways thereafter. Against the aussie, the loonie fell to near a 5-week low.
A stronger yuan against the U.S. dollar may render Chinese imports of dollar-denominated oil cheaper, boosting energy consumption in a country that burns about 10 percent of the world’s oil.
U.S. crude for July delivery climbed as much as $1.69 to $78.87 today, the highest since May 6, and was up $1.28 at $78.46 at 4:37 am ET.
China announced on Saturday that it would resume making the yuan flexible, signaling that it was ready to break a 23-month-old peg to the dollar that had come under intense international criticism.
But in a lengthy statement about how currency reform would proceed, the central bank explicitly ruled out a one-off revaluation, and repeatedly said there was no basis for any big appreciation, adding that the yuan’s value was not far off its fair level.
The Canadian dollar strengthened against the euro in early deals on Monday. As of now, the loonie is trading at a 4-day high of 1.2607 per euro with 1.246 seen as the next upside target level. At last week’s close, the euro-loonie pair was quoted at 1.2647.
During early deals on Monday, the Canadian dollar rose to near a 5-week high of 89.97 against the yen at 5:25 am ET. At present, the loonie-yen pair is worth 89.86. If the loonie gains further, it may likely target the 92.6 level.
The Canadian dollar that jumped to near a 6-week high of 1.0160 against the US currency at 3:35 am ET Monday moved sideways thereafter. Currently, the loonie is worth 1.0166 against the greenback, compared to last week’s close of 1.0215.
The Canadian dollar that fell to near a 5-week low of 0.9004 against the Aussie at 3:50 am ET Monday has been moving sideways since then. Presently, the loonie is worth 0.8990 against the aussie. The aussie-loonie pair closed Friday’s trading at 0.8910.