The loonie closed above US82¢ Thursday, building on the upward push it got yesterday when it reached its highest level in more than two years following the Bank of Canada's rate hike.
The Canadian dollar was trading at an average price of US82.32¢ today, up 0.78 of a U.S. cent. That marks five straight positive trading days in which its value has increased almost US3¢.
"We're definitely a little surprised to see the momentum here given that it really wasn't a surprise that the central bank was going to raise rates one more time. The debate would have been whether it would be September or October," said Sadiq Adatia, chief investment officer of Sun Life Global Investments.
"But the market seems to believe, I think, that there is going to be a continuation of this rate hike, either in October or it will continue on to the new year — that maybe the Bank of Canada is going to continue to be relatively aggressive. And I'm not sure that's true."
Wednesday's hike of the central bank's overnight lending rate to 1% came less than a week after the latest data for economic growth showed an impressive expansion of 4.5% for Canada in the second quarter.
Adatia says the Bank of Canada is going to have to be very mindful of the U.S. Federal Reserve's next moves in terms of any future rate hikes.
The Fed has raised interest rates three times in the last year and has said it plans to raise rates once more this year. But based on a relatively weak jobs report for August that was released on Sept. 1, investors don't think that will happen.
"The Fed is sort of being on pause a little bit here, letting the economy breathe in the few rate hikes they've done so far," Adatia said.
"I think the Bank of Canada should take a page out of the Fed's book."
Meanwhile, the Toronto Stock Exchange's S&P/TSX composite index experienced another day of moderate losses, dropping 35.30 points to 15,024.53.
The TSX has fallen more than 167 points since markets resumed on Tuesday after the holiday weekend.
On Wall Street, major stock indices were mixed, as investors weighed the prospects of big losses from Hurricane Irma which is projected to hit Florida this weekend.
The Dow Jones industrial average gave back 22.86 points to 21,784.78 and the S&P 500 index inched down 0.44 of a point to 2,465.10. The Nasdaq composite index was up 4.56 points to 6,397.87.
In commodities news, gold soared to its highest level in a year when the December bullion contract advanced US$11.30 to US$1,350.30 an ounce.
The October crude contract was down US7¢ to US$49.09 per barrel, the October natural gas contract advanced US2¢ to US$2.98 per mmBTU, and the December copper contract declined a cent at US$3.14 a pound.