The Canadian dollar gained more than half a cent on Monday as the price of crude oil jumped back above $40 US per barrel.
A barrel of West Texas Intermediate was up by more than one per cent to above $40 a barrel on Monday as OPEC and non-OPEC members are set to meet for four days to discuss oil output in Doha next weekend.
"It now seems that among the oil producing countries, a sense of calm and price visibility is preferable to the chaotic downward spiral of a price war," Credit Suisse's chief investment officer Michael Sullivan said in a note yesterday.
The hope of a deal drove oil prices higher on Monday, which in turn was good news for the Canadian dollar.
The loonie gained more than half a cent to 77.52 cents US, its highest level of 2016.
After being pushed down as low as 68 cents US in January, sentiment has turned around for the Canadian dollar of late.
"While the U.S. dollar has weakened against all these currencies since 20th January, it has depreciated the most against the dollars of Canada and Australia, which are large net exporters of commodities," John Higgins of Capital Economics said.
So much so, in fact, that speculators appear to be pouring in. Data from the Commodity Futures Trading Commission shows net long positions stood at 97 contracts in the week ended April 5. That means more investors are betting on the Canadian dollar than are betting against it.
The previous week, there was a net short of 6,180 contracts. In January, the figure was as high as 66,819 shorts.
The optimism in oil and the loonie spilled into the stock market, with the S&P/TSX composite index up 70 points to 13,464.
Financials and energy — the two biggest individual sectors on the TSX — were both higher.
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