Trade data helps boost Canada dollar
By Jennifer Kwan
TORONTO (Reuters) - The Canadian dollar ended higher against the U.S. currency on Tuesday after stronger than expected trade data reinforced the view that economic recovery is progressing steadily.
A government report showed Canada posted a larger than expected trade surplus of C$1.4 billion in February on increased exports of industrial goods and materials. Analysts had predicted Canada would run a surplus of C$600 million in February.
The trade data helped to lift the currency to its strongest level of the North American session at C$1.0007 to the U.S. dollar, or 99.93 U.S. cents, from about C$1.0031, or 99.69 U.S. cents, just before the data's release.
The data showed the Canadian economy is recovering on a broad front, said Doug Porter, deputy chief economist at BMO Capital Markets.
"It's not just domestic spending. We're also seeing net exports adding to growth. That would probably increase the confidence in the Bank of Canada that the coast is clear for them to start raising interest rates, whether the (U.S. Federal Reserve) does or not, and whether the Canadian dollar remains strong or not," he said.
"It does seem like the Canadian economy can sustain higher interest rates."
The Canadian dollar finished at C$1.0019 to the U.S. dollar, or 99.81 U.S. cents, up from Monday's close of C$1.0033 to the U.S. dollar, or 99.67 U.S. cents.
The trade figures also supported comments made by Finance Minister Jim Flaherty on Monday that the Canadian dollar's ascent against the greenback has been "relatively orderly". Continued...