Canada/US Dollar by buzz bishop
Last Thursday, the Canadian commodity-linked currency revisited its 2011 high against the U.S. dollar because of the increase in oil prices as a result of the recent riots in Libya. According to Michael Gregory, senior economist at BMO Capital Markets, the recent run-up in oil over Middle East tensions was one of the most important driving factors behind the currency rise.
Getting over the hurdle
"Since Canada is a net oil exporter, this extra boost we're going to get from higher oil prices specifically could provide that little extra wealth in income spreading across the country, and perhaps necessitate slightly more aggressive Bank of Canada policy over the next little while," he added, further claiming that the Middle East situation could still have a persistent positive impact -- something that will influence the central bank’s policy announcement on March 1.
According to a poll released on Thursday by Reuters, the central bank is expected to remain on hold on Tuesday, while the first interest rate hike of 2011 is generally anticipated in May.
The Canadian currency stood at C$0.9832 to the U.S. dollar, or $1.0171, rising from Wednesday's North American finish at C$0.9886 to the U.S. dollar, or $1.0115.
It had reached as high as C$0.9816 to the U.S. dollar, or $1.0187, revisiting a level it hit on February 17, resulting in the strongest currency value since March 2008.
