The Canadian dollar gained the most in five weeks against the greenback after the nation’s July trade deficit narrowed more than economists predicted, adding to evidence the Bank of Canada is less likely to lower interest rates.

The currency strengthened versus most of its major peers after a report showed the trade gap narrowed to C$2.49 billion ($1.9 billion), versus the C$3.3 billion median forecast by economists surveyed by Bloomberg. Crude oil, the nation’s second largest export, snapped a four-day losing streak.

The "Canadian dollar is getting some additional juice from the trade numbers," said Mark McCormick, North American head of foreign-exchange strategy at Toronto-Dominion Bank. The combination "has helped keep the Canadian dollar resilient on the day."

The trade data helped the loonie rebound from a three-week low reached after an Aug. 31 report showed the nation’s economy contracted in the second quarter by the most since the 2009 recession. The central will meet next week, where the majority of traders forecast that it will keep interest rates unchanged, according to futures data.

The currency appreciated 0.7 percent to C$1.3007 against the U.S. dollar at 11:43 a.m. in Toronto, the biggest gain since July 29.

Hedge funds and other large speculators have been betting in the loonie’s favor since April, according to net-positioning data from the Commodity Futures Trading Commission.The loonie is projected to end the year at C$1.31, according to forecasts compiled by Bloomberg.

Before it's here, it's on the Bloomberg Terminal. LEARN MORE