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Canadian dollar hits 29-year high
The loonie hit its highest level since the disco era after a report released Friday showed strong retail spending in Canadian stores.
The dollar jumped more than half a cent to 91.58 cents US in morning trading. It hasn't been that high since January 1978.
The latest boost to the loonie came courtesy of March retail sales figures, which were released Friday morning. They showed Canadian spending that month rose by 1.9 per cent, following two relatively flat months.
The Canadian dollar has been shooting steadily higher since January, when it was below the 85-cent US level.
Analysts offer several reasons for the loonie's strength. The main one has to do with the Bank of Canada and interest rates.
The strong retail sales report was just the latest piece of economic data to highlight that the central bank may need to raise interest rates as early as this summer.
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On Thursday, the monthly inflation figures showed the core rate of inflation — which excludes the most volatile items — rose to 2.5 per cent last month. That's the highest in more than four years.
Other reasons for the dollar's strength include persistently high commodity prices, the spate of takeovers of Canadian companies by foreign groups, and an American dollar that is weakening against many foreign currencies.
TD Securities' chief fixed-income strategist Marc Lévesque told CBC News he thinks it's possible the central bank could hike rates as early as the July policy meeting.
Many analysts are shying away from predicting parity with the U.S. dollar any time soon. The last time the two currencies were worth the same was in November 1976. But National Bank Financial's chief economist, Clement Gignac, is one who thinks parity is coming.
"We reiterate that the CAD is likely to reach parity with the USD before the end of the decade (average of 95 cents in 2008 and 1.00 in 2009)," he wrote last week.
The loonie hit its highest level since the disco era after a report released Friday showed strong retail spending in Canadian stores.
The dollar jumped more than half a cent to 91.58 cents US in morning trading. It hasn't been that high since January 1978.
The latest boost to the loonie came courtesy of March retail sales figures, which were released Friday morning. They showed Canadian spending that month rose by 1.9 per cent, following two relatively flat months.
The Canadian dollar has been shooting steadily higher since January, when it was below the 85-cent US level.
Analysts offer several reasons for the loonie's strength. The main one has to do with the Bank of Canada and interest rates.
The strong retail sales report was just the latest piece of economic data to highlight that the central bank may need to raise interest rates as early as this summer.
Continue Article
On Thursday, the monthly inflation figures showed the core rate of inflation — which excludes the most volatile items — rose to 2.5 per cent last month. That's the highest in more than four years.
Other reasons for the dollar's strength include persistently high commodity prices, the spate of takeovers of Canadian companies by foreign groups, and an American dollar that is weakening against many foreign currencies.
TD Securities' chief fixed-income strategist Marc Lévesque told CBC News he thinks it's possible the central bank could hike rates as early as the July policy meeting.
Many analysts are shying away from predicting parity with the U.S. dollar any time soon. The last time the two currencies were worth the same was in November 1976. But National Bank Financial's chief economist, Clement Gignac, is one who thinks parity is coming.
"We reiterate that the CAD is likely to reach parity with the USD before the end of the decade (average of 95 cents in 2008 and 1.00 in 2009)," he wrote last week.
