Canadian dollar rises, 'hanging tough' amid economic optimism

Canadian dollar edges 0.1% higher against the greenback

• Trades in a range of 1.3156 to 1.3193

• Price of U.S. oil settles 0.5% lower

• Canadian 10-year yield eases 3.1 basis points

On Wednesday, the Canadian dollar experienced a slight appreciation against the U.S. currency which was otherwise broadly robust. This was largely due to the optimism among investors that the U.S. economy may still soft land despite the Federal Reserve's active campaign to hike interest rates.

In terms of trading, the Canadian dollar, also known as the loonie (CAD=), saw a 0.1% increase, exchanging at 1.3160 to the U.S. dollar or the equivalence of 75.99 U.S. cents. Throughout the day, it fluctuated within the range of 1.3156 - 1.3193. The loonie had reached its peak level since September on the previous Friday, when it touched 1.3090.

“It's hanging tough,” said Adam Button, chief currency analyst at ForexLive. “The market is increasingly comfortable that the U.S. isn't headed for a recession. Strength south of the border is a stabilizing force for the Canadian dollar.”

A resilient U.S. economy and historically low unemployment well over a year since the Fed began rate hikes has repeatedly confounded analysts and investors. Canada sends about 75% of its exports to the United States.

One of Canada's major exports is oil CLc1. It settled 0.5% lower at $75.35 a barrel as investors took profits following earlier gains on tighter U.S. crude supplies and China's pledge to reinvigorate its economic growth.

The Norwegian crown NOK= was the only other G10 currency to gain ground against the U.S. dollar .DXY. The greenback was clawing back some recent declines against a basket of major currencies after inflation in Britain cooled more than economists expected in June, weighing on the pound GBP=.

It follows Canadian inflation data on Tuesday that also showed price pressures slowing more than expected.

It has not been all good news for the economy. Striking Pacific coast dock workers in Canada on Wednesday issued a new 72-hour notice of a walkout, employers said.

The Canadian 10-year yield CA10YT=RR eased 3.1 basis points to 3.350%. It has pulled back from a nine-month high earlier in July at 3.724%.