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LONDON (Thomson Financial) - The Canadian dollar stayed well bid amid expectations that the Canadian economy will benefit from the recent strength in US data.
At 12.00 pm, the Canadian dollar was at 1.0566 against the greenback, down from well above 1.06 earlier today, and from above 1.10 a month ago.
In particular, stronger than expected US job creation figures and manufacturing activity on Friday helped the loonie notch good gains.
Analysts at BNP Paribas said the rebound of the US manufacturing sector now increases "Bank of Canada's comfort in hiking rates on July 10."
"The strong US labour market reading also suggests that the slowdown in US consumption and thereby the Canadian outlook would not be too weak," they added.
But talk of the loonie reaching parity with the US dollar may yet be premature and in the unlikely event that it happens, the gains are not seen sticking, said Steve Barrow of Bear Stearns.
He also expects the Bank of Canada would eventually make comments in the hope of tempering the Canadian dollar's gains, but without actually interfering in the market.
The Canadian dollar has risen consistently since March 20, when strong inflation figures for February were released, reversing the likelihood then of a possible rate cut by the Bank of Canada.
The central bank kept its key interest rate unchanged at 4.25 pct on May 29, for the eighth executive time over the past year, but added it could be necessary to raise it in the near future to allay inflationary pressures.
The bank had noted that economic growth and inflation in Canada during the first part of the year were stronger than the bank expected. The next meeting is on July 10.
LONDON (Thomson Financial) - The Canadian dollar stayed well bid amid expectations that the Canadian economy will benefit from the recent strength in US data.
At 12.00 pm, the Canadian dollar was at 1.0566 against the greenback, down from well above 1.06 earlier today, and from above 1.10 a month ago.
In particular, stronger than expected US job creation figures and manufacturing activity on Friday helped the loonie notch good gains.
Analysts at BNP Paribas said the rebound of the US manufacturing sector now increases "Bank of Canada's comfort in hiking rates on July 10."
"The strong US labour market reading also suggests that the slowdown in US consumption and thereby the Canadian outlook would not be too weak," they added.
But talk of the loonie reaching parity with the US dollar may yet be premature and in the unlikely event that it happens, the gains are not seen sticking, said Steve Barrow of Bear Stearns.
He also expects the Bank of Canada would eventually make comments in the hope of tempering the Canadian dollar's gains, but without actually interfering in the market.
The Canadian dollar has risen consistently since March 20, when strong inflation figures for February were released, reversing the likelihood then of a possible rate cut by the Bank of Canada.
The central bank kept its key interest rate unchanged at 4.25 pct on May 29, for the eighth executive time over the past year, but added it could be necessary to raise it in the near future to allay inflationary pressures.
The bank had noted that economic growth and inflation in Canada during the first part of the year were stronger than the bank expected. The next meeting is on July 10.
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