C$ notches two-week high, helped by technical buying

·2 min read
FILE PHOTO: A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto

By Fergal Smith

TORONTO (Reuters) - The Canadian dollar strengthened to its highest level in more than two weeks against its U.S. counterpart on Monday as a bullish formation for the currency played out in technical charts and investors awaited U.S. inflation data.

The loonie was trading 0.3% higher at 1.2985 to the greenback, or 77.01 U.S. cents, marking its fourth straight day of gains.

The currency touched its strongest level since Aug. 26 at 1.2964, while the USD-CAD currency pair was trading at levels consistent with a double-top formation, a bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two high points.

"USD-CAD is under a little more obvious technical pressure to start the week," Shaun Osborne, chief currency strategist at Scotiabank, said in a note. "This follows the USD's second rejection of 1.3210 so far in September and the USD's weakness below the intervening low of those two moves at 1.3075."

The U.S. dollar extended its pullback against a basket of major currencies as the prospect of further aggressive monetary tightening by the European Central Bank bolstered the euro.

Wall Street rallied as investors positioned themselves for a U.S. consumer price reading on Tuesday that could determine the pace of further interest rate hikes by the Federal Reserve.

The Bank of Canada has also been raising rates and is expected to tighten further despite data on Friday showing that Canada shed jobs for a third straight month in August.

More than a year after the start of the Great Resignation, in which large numbers of U.S. workers have voluntarily quit their jobs, Canada is grappling with its own greyer version: The Great Retirement.

The price of oil, one of Canada's major exports, rose as supply concerns mount heading into the winter. U.S. crude prices settled 1.1% higher at $87.78 a barrel.

Canadian government bond yields were higher across a steeper curve, tracking the move in U.S. Treasuries. The 10-year rose 3.7 basis points to 3.169%.

(Reporting by Fergal Smith; Editing by Andrea Ricci and Paul Simao)