As we noted on CKNW’s Moneytalks last Saturday, our contrarian view was that the Canadian dollar would begin to strengthen and that an interest rate hike from the Bank of Canada may be a lot closer than the first quarter of 2018.
Canada’s balance of trade is noticeably improving, owing to the weaker Canadian dollar, the country’s GDP showing impressive gains in the last two-quarters, and strong employment numbers for May – and in fact the last eight months.
An interest rate hike, at least back from the two emergency quarter-point cuts implemented to respond to declining oil prices, should be on the table for the central bank.
Bank of Canada Senior Deputy Governor Carolyn Wilkins said late on Monday that first-quarter growth in Canada had been “pretty impressive.”
And she said that signs economic growth is broadening would lead the central bank to consider whether current low rates would still be required.
The Canadian dollar is sure acting that way, up over 1.5 cents in the last two days.