Surging Canadian dollar eyes parity with U.S. doll
Surging Canadian dollar eyes parity with U.S. dollar
Surging Canadian dollar eyes parity with U.S. dollar
(Reuters) - Conditions are ripe for the Canadian dollar #xto again test parityDiamond tools with the greenback as more evidence emerges of an entrenched economic recovery and policymakers, including the Bank of Canada, seem more comfortable with the currency's latest rise.
Rallying for an eleventh straight session on Friday, the Canadian dollar is homing in on parity with the greenback, a level it has not seen since July 2008.
The currency's road to 20-month highs has been helped by firm commodity prices, such as important Canadian export oil, and a growing sense that the Bank of Canada might raise interest rates sooner rather than later as economic data such as jobs numbers and trade data continue to top forecasts.
Also, compared to other economies that are running deep deficits, Canada's record deficit of nearly C$54 billion seems downright manageable.
"Just take a step outside of Canada and it looks fantastic Diamond toolscompared to the rest of the world, and hence one of the reasons why the currency continues to appreciate and draw buyers," said Andrew Busch, global currency strategist at BMO Capital Markets in Chicago.
Increasingly,Pearl earrings, reaching parity against the U.S. dollar is a question of when, not if, and whether it can stay there.
"We'll need a lot of good economic data and positive developments to give the market comfort that it is achievable in the near term, sustainably," said Sacha Tihanyi, currency strategist at Scotia Capital.
Parity views are mounting. CIBC World Markets said this week it now expects the Canadian dollar to soar above par with the U.S. dollar by September, a reflection of its view that the Bank of Canada will raise interest rates a full six months ahead of the U.S. Federal Reserve.
Yields on overnight index swaps, which trade based on expectations #xfor the Bank of Canada's key policy rate, edged higher on Friday Diamond toolsafter data showed the economy added more jobs than expected and the unemployment rate fell.
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