dan9999
04-06-2010, 03:16 PM
Loonie hits parity for first time since July 2008
April 6, 2010 | 10:28 AM
canoe.ca
The Canadian dollar hit parity with its U.S. counterpart for the first time since July 2008 on Tuesday, driven by rising commodity prices and optimism about the economic outlook.
The loonie gained 0.1% to $1 per U.S. dollar at 6:51 a.m. in Toronto, from $1.0022 Monday in New York. It slipped back slightly to trade at 99.9 cents US at 10 a.m. EST.
The Canadian currency hit parity with the greenback in Sept. 2007 for the first time in more than three decades. It remained firm until July 22 of the following year, when the loonie weakened sharply, dropping to 77 cents US by mid-October, as global economies shrank and demand for commodities dried up.
Economists said this time around the strong dollar is here to stay.
“The bigger picture is that we will be above parity for some time,” said BMO Capital Markets deputy chief economist Doug Porter. “We are entering a brave new world for the Canadian dollar.”
The latest push to parity has been driven by rising oil and commodity prices on optimism global economies will recover from recession faster than initially thought.
Oil slipped back a fraction on Tuesday after five straight sessions of gains, to trade at about $85.62 a barrel, though analysts say the overall trend is higher.
Canada’s resource-rich economy is also seen as one of the strongest in the industrialized world, expanding at 5% in the fourth quarter. That strong pace of growth, coupled with signs of core inflation pushing above the central bank’s 2% target, is likely to mean interest rates will rise in coming months.
“Canada has everything global investors want,” Knightsbridge Foreign Exchange President Rahim Madhavji said in a note.
There are both winners and losers from the strong dollar, which makes the country’s exports more expensive to overseas buyers, but brings down the cost of goods imported into the country.
“My rule of thumb is a strong currency is good for consumers, but bad for producers,” Porter said.
Some companies, such as Porsche, have already taken steps to pass on some of the benefits of the strong currency to Canadians. Porsche on Monday said it was cutting prices by between $4,000 to $10,500.
Manufacturers and the domestic tourist trade may struggle, economists said.
April 6, 2010 | 10:28 AM
canoe.ca
The Canadian dollar hit parity with its U.S. counterpart for the first time since July 2008 on Tuesday, driven by rising commodity prices and optimism about the economic outlook.
The loonie gained 0.1% to $1 per U.S. dollar at 6:51 a.m. in Toronto, from $1.0022 Monday in New York. It slipped back slightly to trade at 99.9 cents US at 10 a.m. EST.
The Canadian currency hit parity with the greenback in Sept. 2007 for the first time in more than three decades. It remained firm until July 22 of the following year, when the loonie weakened sharply, dropping to 77 cents US by mid-October, as global economies shrank and demand for commodities dried up.
Economists said this time around the strong dollar is here to stay.
“The bigger picture is that we will be above parity for some time,” said BMO Capital Markets deputy chief economist Doug Porter. “We are entering a brave new world for the Canadian dollar.”
The latest push to parity has been driven by rising oil and commodity prices on optimism global economies will recover from recession faster than initially thought.
Oil slipped back a fraction on Tuesday after five straight sessions of gains, to trade at about $85.62 a barrel, though analysts say the overall trend is higher.
Canada’s resource-rich economy is also seen as one of the strongest in the industrialized world, expanding at 5% in the fourth quarter. That strong pace of growth, coupled with signs of core inflation pushing above the central bank’s 2% target, is likely to mean interest rates will rise in coming months.
“Canada has everything global investors want,” Knightsbridge Foreign Exchange President Rahim Madhavji said in a note.
There are both winners and losers from the strong dollar, which makes the country’s exports more expensive to overseas buyers, but brings down the cost of goods imported into the country.
“My rule of thumb is a strong currency is good for consumers, but bad for producers,” Porter said.
Some companies, such as Porsche, have already taken steps to pass on some of the benefits of the strong currency to Canadians. Porsche on Monday said it was cutting prices by between $4,000 to $10,500.
Manufacturers and the domestic tourist trade may struggle, economists said.