The Canadian dollar was up more than one cent in early trading today, rising to 98 cents compared to the U.S. dollar. Here’s a ( link) to a Canadian Business magazine, which provides quite a few details about what’s happening.
The jump is happening along with today’s big stock market rally. Along with moves by various global banks to address Europe’s financial woes, China also announced steps to try and encourage business activity. Positive movement in the global markets has had a direct impact on the strength of the loonie recently, since an uptick in global markets mean increases for resources like metals and oil.
All things being equal the increase in the Canadian dollar is probably linked to the increase in commodity prices especially oil. 2.2 million barrels of oil per day flow south so each $1 increase in the oil price adds over $2 million in foreign exchange. As the volume and price has increased over the years we have seen the Canadian dollar rise dramatically. Other commodities have helped as well.
Hi Scott,
Yeah, oil/commodities does seem to be a big factor. When the loonie strengthens because of potentially good economic news, it seems like the market is saying demand for oil will increase as a result, so Canada will benefit.