Canadian dollar touches 77 cents US for first time since February
S&P/TSX composite index sheds 142.16 points
The Canadian dollar continued to climb Thursday as speculation grew that the Bank of Canada is ready to raise its key interest rate sooner rather than later.
The loonie touched 77 cents US for the first time since February during the session before pulling back at the close to an average price of 76.83 cents US, trading 0.26 of a U.S. cent higher.
The increase was also helped by an uptick in oil prices, with the August crude contract adding 19 cents at US$44.93 per barrel.
Comments from Bank of Canada governor Stephen Poloz on Wednesday raised expectations that a rate increase could come as early as next month's central bank meeting on July 12.
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The bank had lowered its rate twice in 2015 to the very low level of 0.5 per cent to help offset the effects of the lower oil prices.
Chief market strategist Colin Cieszynski of CMC Markets Canada says Poloz's remarks point to the prospective trend that central banks around the world may start moving on rates.
The U.S. Federal Reserve has already hiked its interest rates three times in about six months, and earlier this month, suggested it will raise rates again later this year.
"Ideally what the Bank of Canada is looking for is some kind of sweet spot for rates," said Cieszynski.
"A few years back when the loonie was up at par (with the U.S. dollar), companies were really, really struggling," he said. "When it was down in the low 70s, it was tough for consumers."
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He says he expects the Canadian dollar to "take a break" over the next few days because it has risen a full U.S. cent against the greenback in two days.
The gain in the currency Thursday came as the S&P/TSX composite index shed 142.16 points, or almost one per cent, to 15,213.42, with nearly all sectors ending in the red.
It was also a negative session in New York. The Dow Jones industrial average lost 167.58 points to 21,287.03 and the broader S&P 500 index fell 20.99 points to 2,419.70.
The Nasdaq composite index dropped 90.06 points to 6,144.35 as U.S. technology companies continued to decline for another day.
Elsewhere in commodities, the August gold contract retreated $3.30 to US$1,245.80 an ounce, the August natural gas contract dipped five cents at US$3.04 per mmBTU, and the September copper contract added two cents at US$2.70 a pound.