Investing.com - The Canadian dollar touched fresh 14-month highs against its U.S. counterpart on Monday despite slightly lower prices for oil as higher interest rates continued to underpin demand for the currency.
USD/CAD was trading at 1.2655 by 09.20 a.m. ET (13.20 a.m. GMT), little changed for the day after falling as low as 1.2641 earlier, the weakest since May 2016.
The loonie notched up a third straight week of gains last week after the Bank of Canada raised interest rates for the first time in almost seven years on Wednesday and indicated that it will need to hike again in the coming months.
Prices for oil, a major Canadian export edged lower on Monday as concerns over a global supply glut continued to weigh.
Elsewhere, the greenback was wallowing near 10-month lows against a basket of the other major currencies amid lingering doubts over the Federal Reserve’s plans to raise interest rates again this year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was last at 94.94.
The index touched a 10-month low of 94.86 overnight after falling 0.69% on Friday.
The greenback remained on the back foot after weak U.S. inflation and retail sales data on Friday added to doubts over the Fed’s plans for a third rate hike this year.
The Fed hiked rates at its June meeting and stuck to its forecast for one more rate hike this year but the sluggish inflation outlook has raised questions over whether officials will be able to stick to their planned tightening path.