The Canadian dollar hit parity with the U.S. dollar in early trading Tuesday, as investors anticipated higher domestic interest rates.
After briefly matching the U.S. currency, the loonie was trading at about 99.95 cents US.
Michael Gregor of BMO Capital Markets wrote in a morning note that the Reserve Bank of Australia hiked rates 25 basis points Tuesday to 4.25 per cent, which sparked “speculation that the Bank of Canada will soon be following suit.”
The dollar picked up steam from last week, when it began the trading week at 97 cents US, with oil prices above $85 US and copper at 20-month highs, manufacturing data looking solid and better-than-expected Canadian GDP growth in January. Gold and copper were trading slightly lower before the bell Tuesday and oil was up eight cents to $86.70 US a barrel.
The commodities boom helped bring the Canadian dollar to parity with the U.S. dollar in September 2007 for the first time since 1976. It continued to fluctuate above and below equality with the U.S. dollar right up until the summer of 2008.
Then the global economic crisis hit, taking down commodity prices, stock markets and the Canadian dollar with it.
Since going as low as the mid-70-cent US range in March 2009, the loonie has steadily climbed back to a level playing field with the U.S. dollar.
