Loonie beats back bears to top 74 cents US in 'Revenant-like' performance

The Canadian dollar is giving a "Revenant-like performance" in the wake of news that Canada’s GDP grew a better than expected 1.2 per cent in 2015.

Stocks head higher on corporate results and better-than-expected GDP news

The Canadian dollar is above 74 cents US on Tuesday, after trading below 69 cents in mid-January. (Jonathan Hayward/Canadian Press)

The Canadian dollar is giving a "Revenant-like performance" in the wake of news that Canada's GDP grew a better-than-expected 1.2 per cent in 2015.

That's the comparison given by National Bank on a day the loonie gained three-quarters of a cent to 74.58 cents US.

The bears that attacked the loonie include falling commodity prices and oil at 12-year lows, as well as higher U.S. interest rates at a time when Canada's economy seemed stalled. There were plenty of naysayers predicting deep economic gloom ahead. In mid-January, the dollar dipped below 69 cents US.

But it's sprung back in the past two weeks. 

National Bank economists Stéfane Marion and Krishen Rangasamy believe the loonie is headed for 76 cents by the end of the year, though all currencies will be volatile throughout 2016.

"Mauled by bears and left for dead just a few weeks ago, the Canadian dollar is now back with a vengeance," they wrote in a report today, saying Leo DiCaprio should be impressed by the loonie's "Revenant-like performance."

In the movie The Revenant, DiCaprio plays a frontiersman who survives a bear attack in which he was left for dead.

A softening U.S. dollar has helped the loonie recover. But markets also have started to question whether the Bank of Canada needs to cut interest rates again, they said.

Oil and markets up

There are hopes that Ottawa's fiscal stimulus will be enough to boost the economy and that oil will recover at least to $40 US.

Oil was having a good day on Tuesday, after Russia said it was close to a deal with OPEC that could put a cap on production.

West Texas Intermediate, the benchmark North American contract, rose 58 cents to $34.34 US a barrel, a two-month high.

Markets were also on a tear.

The TSX was ahead 112 points to 12,972 at the close. Energy stocks strengthened and financial shares advanced after Scotiabank turned in a rise in quarterly profit.

Much of the optimism came from Canada's fourth-quarter GDP report. Growth in the quarter was a scant 0.8 per cent, but that was well ahead of expectations and pushed full-year growth to 1.2 per cent.

The main drag on the Toronto index came from Valeant shares, which sank after the company revealed it faces a Securities Exchange Commission probe.

The Dow Jones industrial average climbed 348 points to 16,865, The S&P was up 41 points to 1973 and the Nasdaq composite index added 131 points to 4,689.


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