Canada dollar edges above U.S. dollar; highest since 2008
By Claire Sibonney and Jennifer Kwan
TORONTO (Reuters) - The Canadian dollar briefly pushed above parity with the greenback on Tuesday for the first time since July 2008, but slipped back to end the day just below the one-for-one level.
Powered by rising commodity prices and an economic rebound that investors expect will soon trigger interest rate hikes, the Canadian dollar climbed as high as C$0.9988 to the U.S. dollar, or US$1.0012, after firmer economic data helped fuel investor demand for commodity-linked currencies.
The currency finished at C$1.0012 to the U.S. dollar, or 99.88 U.S. cents, up from Monday's finish at C$1.0028 to the U.S. dollar, or 99.72 U.S. cents.
The currency has risen more than 5 percent against the U.S. dollar so far this year after gaining almost 16 percent in 2009.
The currency's rise has been supported by Canada's healthy fundamentals relative to the United States and other struggling Western economies, as well as by the improving global economic outlook.
All these factors suggest the currency's strength may be more sustainable than when it last traded at par with the greenback about 20 months ago, said George Davis, chief technical strategist at RBC Capital Markets.
"The backdrop is basically pointing to a market that is looking for growth and expansion in terms of the economic cycle. That backdrop is lending itself very well to the Canadian dollar," Davis said.
"We've had, on balance, stronger than expected economic data here in Canada, especially when we look at GDP, retail sales and employment, and that has a lot of people in the market more convinced that the Bank of Canada is going to act ahead of the (U.S. Federal Reserve) in terms of raising interest rates." Continued...