At just under 83 cents U.S, the Canadian dollar is now at its highest level since May 2015.
The loonie broke above 82.90 cents U.S. on Wednesday (May 12), hitting its highest level against its American counterpart in six years.
Growing strength in commodities and persistent U.S. dollar weakness has sent the Canadian dollar up 5.6% against the U.S. dollar so far this year, with the Canadian dollar posting the best return among all G10 currencies.
Commodities, including copper and grains, are trading at multi-year highs, while West Texas Intermediate crude oil hovered around $66 U.S. per barrel, near its highest level since 2018.
The Canadian dollar has traditionally been considered a "commodity currency" due to the reliance of the domestic economy on the commodities such as grains and oil.
Also boosting the Canadian dollar are divergent signals on interest rates between Canada and the U.S. Bank of Canada Governor Tiff Macklem has opened the door to a potential rate increase in the second half of 2022, while U.S. Federal Reserve Chairman Jerome Powell has repeatedly indicated it’s unlikely the Fed will raise interest rates before 2023.
