Loonie hits 91.29 cents US, soars over 7 cents in May
Last Updated: Friday, May 29, 2009 | 11:43 AM ET Comments62Recommend42CBC News
The Canadian dollar is up 1.59 cents to 91.29 cents US in midday trading Friday, adding to a run-up of more than seven cents since the beginning of May.
The loonie was last above 90 cents in early October 2008.
Analysts said a number of factors were at play in the sharp rise of the currency.
Canadian stock markets have staged a spring rally, with the TSX composite index gaining more than 37 per cent since March 10.
Crude oil prices are at a six-month high of more than $66 a barrel US, with more than $10 of that rise coming in May.
At the same time, the U.S. dollar has been weakening recently as investors trade their greenbacks for foreign equities.
The rise in stock markets and oil prices also reflects the hope that an economic recovery may be just around the corner.
"You've got a couple of things — you have these green shoots, signs that the U.S. and global economies are not basically decelerating as quickly as thought, which has helped boost commodity prices," said David Watt, senior currency analyst at RBC Capital Markets.
"And you have some concerns about the U.S. dollar, which is the most pressing concern that's going on now," he said. "I'm surprised. I didn't expect the Canadian dollar to get to these levels and the thing that changed my perception recently has been the concern about the U.S. dollar."
Analysts have also noted that the rising Canadian dollar is causing headaches for the Bank of Canada as it draws up economic forecasts, since a higher loonie tends to dampen exports — a key factor in any economic recovery
See:
http://futures.tradingcharts.com/chart/CD/M
Note the increase in open interest.
When May is included in the graph it will be even more dramatic. I would not expect to see this kind of volatility in a major G8 currency. Our dollar and the U.S. dollar is acting more like a third world currency.
Last Updated: Friday, May 29, 2009 | 11:43 AM ET Comments62Recommend42CBC News
The Canadian dollar is up 1.59 cents to 91.29 cents US in midday trading Friday, adding to a run-up of more than seven cents since the beginning of May.
The loonie was last above 90 cents in early October 2008.
Analysts said a number of factors were at play in the sharp rise of the currency.
Canadian stock markets have staged a spring rally, with the TSX composite index gaining more than 37 per cent since March 10.
Crude oil prices are at a six-month high of more than $66 a barrel US, with more than $10 of that rise coming in May.
At the same time, the U.S. dollar has been weakening recently as investors trade their greenbacks for foreign equities.
The rise in stock markets and oil prices also reflects the hope that an economic recovery may be just around the corner.
"You've got a couple of things — you have these green shoots, signs that the U.S. and global economies are not basically decelerating as quickly as thought, which has helped boost commodity prices," said David Watt, senior currency analyst at RBC Capital Markets.
"And you have some concerns about the U.S. dollar, which is the most pressing concern that's going on now," he said. "I'm surprised. I didn't expect the Canadian dollar to get to these levels and the thing that changed my perception recently has been the concern about the U.S. dollar."
Analysts have also noted that the rising Canadian dollar is causing headaches for the Bank of Canada as it draws up economic forecasts, since a higher loonie tends to dampen exports — a key factor in any economic recovery
See:
http://futures.tradingcharts.com/chart/CD/M
Note the increase in open interest.
When May is included in the graph it will be even more dramatic. I would not expect to see this kind of volatility in a major G8 currency. Our dollar and the U.S. dollar is acting more like a third world currency.
Comment