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The Canadian dollar rose towards the highest in eight months versus its U.S. counterpart following a report showed the nation’s economy growing at its fastest in three years.
The currency strengthened for a fourth day, its longest streak of gains forever of February, as gross domestic product grew 0.6 percent in January from the month earlier, the biggest increase since July 2013. That exceeded 20 of 21 estimates before the report, with manufacturing leading the development.
Canada’s currency, referred to as loonie for the picture of the aquatic bird on its $1 coin, slumped to its lowest in additional than a decade earlier this year as the price of oil – the nation’s major export – tumbled. A rally in oil in recent weeks has bolstered the currency, lifting it 7.4 per cent since Dec. 31, endorsing the Bank of Canada’s decision to avoid further easing at its meeting this month.
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“It’s was a pretty strong report through and thru,” said Mazen Issa, senior foreign-exchange strategist at Toronto- Dominion Bank in Ny. “Near-term risks are tilted towards a bit more Canadian dollar strength,” he said, adding that long term, “$130 or $135 seems to be consistent with fundamental re-balancing in the economy.”
Forecasters are expecting the Canadian dollar to weaken by year-end. The median in excess of 50 estimates compiled by Bloomberg calls for the loonie to fall to $1.33 per U.S. dollar by Dec. 31. Hedge funds and other large speculators are also positioned for a slump, even while curbing bets on the weaker loonie to the least since June a week ago.
The loonie climbed around 0.8 per cent to $1.2863 per dollar, its highest on the closing basis since July 14. The currency traded up 0.7 per cent at $1.2870 as of 9:53 a.m. in Toronto. One loonie buys 77.70 U.S. cents.
Bloomberg News
