The currency traded as low as C$1.0319 in early January before rallying to 98.42 cents per U.S. dollar this month as the Standard & Poor’s 500 Index gained. Optimism over accelerating global growth bolstered demand for Canada’s raw materials, which account for about half of export revenue. Bank of Canada Governor Mark Carney speaks in Waterloo, Ontario, on April 2.
“Better U.S. data is constructive for Canada,” Brian Kim, a currency strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Connecticut, wrote in an e-mail. “The reduced uncertainty on Europe and the global outlook have helped pare Bank of Canada rate-easing expectations for 2012, which helped the Canadian dollar.”
The loonie, nicknamed for the image of the aquatic bird on the C$1 coin, rose 2.4 percent in the quarter to 99.87 cents against the U.S. dollar yesterday in Toronto. One Canadian dollar purchased $1.0013. It ended last year at C$1.0213.
David Woo, the bank's head of global rates and currency research, said Canada's dollar could shoot as high as C$0.85 to the U.S. dollar, or $1.18 by 2013.
That would beat the Canadian currency's modern day high of $1.10, reached in November 2007. The Canadian currency was at C$0.99 to the U.S. dollar on Tuesday, or $1.01.
"The balance of risk points to a much weaker (U.S.) dollar and Canada, on the strength of its relatively stronger fiscal position, should basically see its currency appreciate ... in the general environment of (U.S.) dollar weakness across the board," Woo told Reuters in Toronto.
"The fiscal story holds the Fed hostage in terms of inability to exit from (quantitative easing).
The Bank of Canada is expected to raise interest rates at a much quicker pace than the U.S. Federal Reserve, and Woo said that would also support the Canadian dollar.
No comments:
Post a Comment