C$ gains ground on U.S. weakness
Canada's loonie continued its winning streak against the U.S. dollar early Thursday as investors viewed Canadian economic prospects as brighter than many other countries.
One dollar bought $1.0438 US in the mid-morning session. That value represented a gain compared with Wednesday's close when a Canuck buck was worth $1.0415.
The rarified $1.04 level was the best showing for the Canadian dollar since November 2007.
International currency traders have purchased the Canadian currency in recent weeks on the basis of the country's relatively strong showing compared with other economies. The national economy has expanded at a faster pace and created more jobs than other countries, where the recession of 2008-09 has continued to hinder a more robust recovery.
As well, Canada's oil reserves have benefited from rising world crude valuations and similarly improved the country's economic prospects, analysts said.
Thursday's gains were in advance of Friday's employment report in which Statistics Canada is expected to report that Canada added 28,000 new jobs in March.
Interestingly, a higher jobs figure might actually be bad for the Canadian currency, according to Scotiabank economist Derek Holt.
"There isn’t much reason to expect anything other than a long-run average pace of job creation, but an upside surprise would play into the (Bank of Canada's) productivity concerns. That said, growth in hours worked has been weaker than job growth," Holt said in a note on Thursday.
In addition to Canada's economic strength, the European central bank boosted its refinancing rate by 25 basis points to 1.25 per cent in a bid to attack growing inflationary pressures.
Generally, higher interest rates draw foreign currency investors driving up the value of, in this case, the euro compared with other currencies.
Interestingly, the U.S. dollar gained slightly compared with the euro in trading, an indication that Portugal's accelerating debt crisis might be sending some dollar buyers back to the American greenback as a so-called "safe haven" currency, experts noted.