CANADIAN DOLLAR REBOUNDS FROM TWO-WEEK LOW, HELPED BY MONTH-END HEDGING FLOWS

By Fergal Smith

TORONTO, Aug 31 (Reuters) - The Canadian dollar rebounded from a two-week low against its U.S. counterpart on Monday as oil prices rose and investors executed month-end hedging transactions, while a Bank of Canada interest rate decision was awaited midweek.

The loonie was trading 0.3% higher at 1.3855 per U.S. dollar, or 72.18 U.S. cents, after earlier touching its weakest intraday level since August 14 at 1.3911.

• The Canadian dollar has rallied slightly today on a combination of month-end hedging flows and a small uptick in oil as the U.S. and Iran traded strikes over the weekend," said Noah Buffam, an FX strategist at CIBC Capital Markets.

• Investors often execute currency transactions around the end of the month to manage changes in their foreign exchange exposure due to  portfolio movements.

• The price of oil, one of Canada's major exports, rose after a resumption of military action between the U.S. and Iran rekindled market concerns about global supply disruption. U.S. crude oil futures were trading 2.8% higher at $85.72 a barrel.

• For the month, the loonie was on track to gain 1.2%, which would be its second straight monthly advance, as recent domestic data showed economic growth accelerating.

• Speculators have reduced their bearish bets on the Canadian dollar, data from the U.S. Commodity Futures Trading Commission showed on Friday. Non-commercial net short positions fell to 121,522 contracts as of August 25, down from 158,166 in the prior week.

• "Moving forward we expect the Canadian dollar will weaken once again, as the market refocuses on tariff risks and because we see risks that U.S. data outperforms near-term expectations," Buffam said.

• Earlier this month, the U.S. imposed new 50% tariffs on $20 billion of Canadian imports after talks between the two countries collapsed.

• The Bank of Canada will keep its overnight rate at 2.25% on Wednesday and leave it unchanged for at least another year, according to a Reuters poll of economists.

• Canadian bond yields moved higher across a steeper curve, tracking moves in U.S. Treasuries. The 10-year was up 2.9 basis points at 3.755%, trading near its highest level in two years.

(Reporting by Fergal Smith; Editing by Cynthia Osterman)

2026-08-31T18:12:58Z