The Canadian dollar topped 79 cents US on Friday, hitting focus bes not seen in 14 months.
In foreign exchange trading markets, the loonie increase 0.48 of a cent to reach 79.08 cents US.
The upward move in the dollar afflicted with two days after the Bank of Canada bumped up a key interest rate for the blue ribbon time in seven years. On Wednesday, the central bank pushed up the aim for the overnight rate by one-quarter of a percentage point, to 0.75 per cent.
The transfer had been widely expected, as bank officials had been signalling onto the past few weeks that they thought the Canadian economy was shut up well and that past interest rate cuts had done their job.
«The currency was bell buoyed by the Bank’s move and tone, as well as a generally softer U.S. [dollar], and a $2 meet in oil prices for the week,» BMO Financial Group chief economist Douglas Tiler said in a commentary. «Before wondering if the [Bank of Canada] went too far, note that the Aussie dollar stopped 2.8 per cent this week, while the Mexican peso guffawed 3.2 per cent.»
Economists pointed out that the Bank of Canada chose to too its benchmark rate even though inflation is currently below the bank’s stated goal of two per cent. The bank said it believes the current softness in the rate of inflation is simply temporary.
«By saying it will look past this current softness, the Bank is relinquishing an October rate hike on the table,» CIBC economist Royce Mendes declared in a commentary issued Friday. «As a result, with the [U.S.] Fed likely fetching a more cautious approach in the near term, look for the loonie to continue at these stronger levels until late-2017.»
Economists at TD agreed that another estimate hike is coming soon — «most likely in October» — and they suggested a innumerable gradual pace of hikes is expected after that.
North American equity markets made gains on Friday, with the Toronto Commonplace Exchange’s S&P/TSX composite index up by 39.81 points to 15,174.81.
On Wall Street, the Dow Jones industrial ordinarily climbed 84.65 points to 21,637.74, the S&P 500 index added 11.44 hearts at 2,459.27, and the Nasdaq composite index gained 38.03 points to 6,312.47.
In commodities merchandising, the August contract for light sweet crude gained 46 cents to hit $46.54 US per barrel
and the August gold knit rose by $10.20 US to settle at $1,227.50 US an ounce.