TORONTO – The Canadian dollar briefly touched the 80-cent US mark Friday, signalling a remarkable rebound for the currency this year thanks to rising commodity prices and weakness in the greenback.
The loonie hit the 80-cent US level on the nose, minutes after North American stock markets opened for trading. It later pulled back.
The last time the currency closed above the 80-cent US level was on June 30, 2015, when it settled at 80.06 cents US.
Colin Cieszynski, chief market strategist at CMC Markets Canada, says the loonie has been building momentum since late January.
READ MORE: Canadian economy dips in February after months of growth
“It’s really staged a very impressive comeback over the last three months or so,” Cieszynski said, adding that the 80-cent US mark is a “big psychological barrier” for the dollar.
By the early afternoon, the loonie had retreated to 79.47 cents US, down 0.22 of a U.S. cent from Thursday’s close.
In January, the Canadian dollar was trading around the 68-cent US mark, but it has since been aided by a rally in crude prices and a decline in the greenback.
“The Canadian dollar rebound has been hand-in-hand with the rebound in crude oil,” Cieszynski said.
Oil is unlikely to rise much higher, which means the loonie is also unlikely to continue its red-hot winning streak, Cieszynski said.
Cieszynski predicts the currency will either trade at around its current level for some time or head for a moderate correction.
READ MORE: Loonie gains ground, reaches 9-month high as oil prices bounce back
“It looks like it’s tired and getting ready for a rest here,” he said.
The jump came as the S&P/TSX composite index was up 34.37 points to 13,920.80, while the June contract for benchmark North American crude oil was trading at US$45.39, a drop of 64 cents.
Earlier, Statistics Canada reported that the economy contracted by 0.1 per cent in February, the first monthly decline since September, though that was in line with expectations.
New York was in the red, with the S&P 500 down 20.59 points to 2,055.22, the Dow Jones industrial average sliding 131.05 points to 17,699.71 and the Nasdaq composite falling 48.34 to 4,756.95.
June natural gas rose eight cents to $2.15 per mmBtu, while June gold gained US$26.30 at US$1,292.70 per ounce.
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