The Canadian dollar could exceed parity with the US greenback this summer

Thursday, March 11, 2010

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The Canadian dollar could exceed parity with the US greenback this summer, according to a new report by CIBC World Markets.

Loupe

The Canadian dollar has remained above 97 cents US. <i>(Photo credit: Bloomberg)</i>

CIBC's experts anticipate that the loonie will increase to $1.02 US by September. The Canadian dollar will then slip back to 97 cents US by the end of 2010.

Basically, an anticipated rise in the Bank of Canada's interest rates in July will push the loonie above parity with its US counterpart by summer. CIBC sees an increase of three quarters of a point in interest rates, which would make the Canadian dollar more attractive.

CIBC chief economist Avery Shenfeld stressed that we have already seen the Canadian dollar gain several cents in recent weeks as the market began to firm up expectations of a July rate hike by the Bank of Canada.

Other factors could contribute to the appreciation of the Canadian dollar. For example, the report cites increased demand for products such as oil, minerals and fertilizer, and an environment conducive to the acquisition of Canadian companies by foreign investors.

When domestic markets opened on Wednesday, the Canadian dollar was worth 97.46 cents US, an increase of 0.03 cents US. The American dollar was trading at 102.61 cents CAN, a decline of 0.03 cents CAN.

The Canadian currency rose above 98 cents US in recent weeks.


Source:
La Presse Canadienne . les affaires.com / 10-03-2010
Avec PC.