The Canadian Dollar rose to new heights this morning grazing a rate of $1.05 US. Happening for the first time since November 2007, strong inflation, signs of global economy recovery and high oil prices are propelling this rise.
Early this morning the loonie traded at $1.0501 pushing the US dollar to a lower rate of $0.9514. Higher oil prices are affecting both dollar’s trade values as oil prices rose to $110 USD per barrel.
“The USD should weaken further as the combination of US monetary and fiscal policy weighs heavily on the outlook,” said Camilla Sutton, Chief Currency Strategist at Scotia Capital, in a statement
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The Canadian Dollar, on the other hand, is currently benefiting from the USD decline.
“The single most important development today is that the USD is broadly lower and CAD is benefitting on the back of this. Yesterday’s stronger than expected inflation print and the subsequent re‐pricing of the outlook for the Bank of Canada interest path has also helped, as did strong leading indicators. However, as the top chart highlights interest rate spreads have been an important driver, but in terms of correlations, commodities are proving the most important factor for the CAD,” said Sutton.
A fall of the US dollar is speculated to potentially affect the US’s recovering economy. This may affect the Loonie detrimentally. “On the crosses the CAD is likely to underperform as the Canadian economy will benefit from high oil prices, but will prove vulnerable to any dampening of the US economy,” continued Sutton.