09:02 AM EDT, 05/06/2025 (MT Newswires) -- Despite lackluster economic growth, tariff threats from the United States, falling oil prices, and a weakening labor market, the Canadian dollar (CAD or loonie) has jumped 5.4% against the US dollar (USD) in just three months, noted National Bank of Canada.

The loonie has benefited from broad-based US dollar aversion, reinforced by its rise as the world's fifth most widely held reserve currency, said the bank.

Speculators are also giving newly elected Prime Minister Mark Carney the benefit of the doubt, significantly reducing their short positions on the CAD in anticipation of successful USMCA renegotiations and a rebound in economic momentum, state National Bank.

However, markets have gotten ahead of themselves. According to the bank's model, the CAD is overvalued by more than nine cents relative to the USD.