Loonie Rises Higher

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The Canadian dollar has risen to its highest level against the U.S. currency, riding the soaring commodity and equity prices, also Australia’s move to raise its key cash rate.

The Canadian currency reached an intraday high of 94.66 cents (U.S.), its highest level since October 1st, 2008; it closed at 94.38 cents.

The rise in the Canadian dollar is supported by soaring commodity prices; not to mention oil rising above $71 a barrel and gold hitting a record high of $1,040 an ounce.

With Australia’s decision to increase interest rates, Camilla Sutton, strategist at Scotia Capital notes that if Australia is now looking at their market and the Asian market as growth returning to trend, it is a positive for commodities.

With higher stock markets, investors gauge themselves on the amount of risk they can take; this is also supported by the strength of the currency.

There is a strong reading from Canada’s September Ivey Purchasing Managers Index, boosting the investor sentiment.

Canadian bond prices were lower across the curve as money flowed to higher yielding rates.

The two year bond went down 13 cents to $99.55, yielding 1.2%; while the 10 year bond dropped 42 cents to $103.77, yielding 3.2%. The 30 year bond was down 65 cents at $119.60, yielding 3.8%; the 20 year U.S. Treasury bond yielded 4%.

The rate hike in Australia has given speculation that the central bank might raise their rates. Scotia Capital economists note that this is a possibility that Canada is following sooner is zero in their perspective.

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