The U.S. dollar fell to C$0.9601, down more than half a percent. This was a height now reached for Canadian currency since 1976. The Canadian dollar has been climbing steadily since January, when it was below $0.85 U.S. Canada’s strong commodities exportation, as well as surging oil and gold prices, have kept the Canadian dollar strong.
So now that the loonie is at parity with the U.S. dollar, how high will our dollar rise? Jack Spitz, the director of foreign exchange at Nation Bank Financial said that what happens next is going to depend on signals from the Bank of Canada and Minister of Finance.
“How far [the loonie] goes will be based on where the market sentiment sees the Bank of Canada going forward.”
The loonie is expected to retain its status above the U.S. dollar into the end of this year and into early next year, according to experts. This reflects the expectation that the Bank of Canada will hike its benchmark rates in December.
A strong Canadian dollar affects the manufacturing sector, as well as tourism, hospitality and the gaming industry. Americans won’t have the incentive to cross the border anymore.
March retail sales figures were released Friday morning, which showed an increase in Canadian spending by 1.9%. This figure follows on the heels of two relatively flat months. Inflation numbers were released on Thursday at an increase of 2.5%, a four year high.
photo: canada.com
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