Canada's dollar staged its biggest five-day rally since October after central banks including the Bank of Canada took steps last week to make it cheaper for lenders to borrow dollars during emergencies.
The Canadian dollar touched a two-week high on Friday as speculation about a possible European lending plan involving the International Monetary Fund buoyed demand for higher-yielding assets. Bank of Canada Governor Mark Carney is forecast to keep his key interest rate at one per cent on Tuesday, three days before European Union leaders meet in Brussels to discuss proposals aimed at progressing toward fiscal union.
"What is going on in Canada is pretty much irrelevant in the context of what will go on in Europe [this] week," Shaun Osborne, chief foreign-exchange strategist at Toronto-Dominion Bank in Toronto, said in a telephone interview on Friday. "No one expects rates to budge for quite some time. People will move on pretty quickly and refocus on Europe. The big day is Friday, when everyone is waiting for a rabbit to be pulled out of the hat."
The loonie, as the currency is also known for the image of the aquatic bird on the C$1 (Dh3.6) coin, gained 2.6 per cent last week to C$1.0195 per US dollar in Toronto, its biggest weekly climb since October 14. Canada's dollar, the world's seventh-most-traded currency, declined 1.6 per cent in November. One Canadian dollar buys 98.09 US cents.