The Canadian dollar rose to 14-month highs against its broadly weaker U.S. counterpart on Monday as political turmoil in Washington continued to weigh on the greenback, while upbeat domestic data bolstered the loonie.
The greenback remained on the defensive after White House spokesman Sean Spicer resigned on Friday, underlining investor concerns over the upheaval in the Trump administration.
The dollar had already come under pressure following reports late last week that the investigation into alleged links between President Donald Trump’s campaign and Russia in last year’s election is extending into his business.
Political developments looked likely to remain in the spotlight on Monday following reports that President Trump was set make a statement on health care at 3:15 p.m. ET.
An attempt by Republican lawmakers to replace Obamacare collapsed last week, delivering a major policy blow to the Trump administration.
The failure to pass healthcare reform has dampened hopes for the passage of Trump’s other legislative efforts, such as overhauling the tax code and implementing fiscal stimulus.
Doubts over the Federal Reserve’s plans for a third rate hike this year have also fed into dollar weakness.
The Fed is to hold its next meeting on Wednesday and is widely expected to hold policy steady. Officials may also give some insight into its plans to start normalizing its balance sheet.
The loonie received a boost after official data showing that Canadian wholesale trade rose more than expected in May.
Statistics Canada reported that wholesale sales rose 0.9%, compared to forecast for an increase of 0.5%, propelled by increased sales of motor vehicles and agricultural supplies.
Higher prices for oil, a major Canadian export also supported the currency.
Demand for the Canadian dollar continued to be underpinned by expectations for higher interest rates after the country’s central bank hiked rates for the first time in seven years this month and indicated that it will need to hike again in the coming months.