The Canadian dollar rose against its US counterpart as commodities and stocks gained, increasing attractiveness of assets related to economic growth, on the speculation that the European crisis may be resolved.
February delivery for crude oil, the key Canadian export, jumped $0.75 to $91.86 per barrel on NYMEX as US crude oil inventories decreased more than was predicted. March delivery for in copper advanced $0.0405 (0.9 percent) to $4.3895 per on COMEX. The S&P 500 climbed above its highest closing price since August 2008 on the speculation that Portugal will be bailed out.
The rally of commodities and stocks resulted in the speculation that Canada’s central bank will increase the interest rates. The economists predict that the benchmark interest rate, which currently stands at 1 percent, will rise to 1.75 percent or even as high as 2.5 percent this year.
USD/CAD traded at 0.9862 as of 04:34 GMT after it dropped from 0.9900 to 0.9857 yesterday. EUR/CAD traded near 1.2921 after yesterday’s advance from 1.2844 to 1.2945.
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