The Canadian dollar rose Tuesday for a sixth session in a row, a streak that has been fuelled by an increasingly hawkish tone from the Bank of Canada amid mounting expectations it will raise its key interest rate next week.
The loonie was ahead 0.21 of a cent to an average trading price of US77.27¢. The currency has gained nearly US2¢ since June 23.
Tuesday’s bump in the loonie came after Bank of Canada governor Stephen Poloz hinted yet again in an interview with a German newspaper that the central bank may be ready to move on the benchmark rate, which has been locked at 0.5% for two years. The next rate announcement is set for July 12.
Senior portfolio manager Steve Belisle said Poloz’s comments, which build upon other remarks he has made in recent weeks, definitely indicate that he’s “pointing in the direction” of a rate hike, and with the meeting still a week away, there is still a bit more room for the currency to climb.
“It’s gone up quite a bit already,” said Belisle, who works at Manulife Investments in Montreal. “But maybe it’ll move a couple more fractions of a cent.”
He said in the past few months, many central banks around the world have indicated that they are ready to tighten monetary policy as the global economy continues to show steady signs of improvement.
In equities, Canada’s main stock index was dragged down today, pulled down by most sectors including gold and materials.
The S&P/TSX composite index fell 51.58 points at 15,130.61 after being closed on Monday for Canada Day.
The index seemed to be unconcerned with potential global turmoil following reports that North Korea fired yet another ballistic missile toward Japan.
North Korean state media said it was the country’s first successful test of an intercontinental ballistic missile, flying 933 kilometres for 39 minutes before falling into the sea.
It was quiet south of the border, with U.S. indices and commodity markets both shut down for the July 4 holiday.