The Canadian dollar hit its highest level since July, 2008 on Friday after a report showed strong gains in the labour market.
The currency climbed to 98.20 cents (U.S.) from Thursday's close of 97.63.
"The quality of job creation this month is really quite high," said Eric Lascelles, chief economics and rates strategist at TD Securities. "The market is pleasantly surprised by the absolute gain."
The economy created 20,900 jobs in February with the unemployment rate fell to 8.2 per cent, Statistics Canada. Notable was a surge in full-time jobs which rose 60,200, Mr. Lascelles said.
While a strong dollar traditionally hurts export-sensitive companies by pushing up the cost of their goods abroad, the recent surge will be a boon to many Canadians who are heading to the United States for spring break, where they will have more buying power.
"So that's very good news to the Canadian travellers lining up to buy U.S. dollars today," said Scotia Capital currency strategist Camilla Sutton.
The dollar has been steadily climbing for the past few weeks amid hotter-than-expected economic growth and higher oil prices . It moved higher Friday as investors bet the Bank of Canada may hike its benchmark interest rate earlier rather than later.
Traders may be getting ahead of themselves, said Stewart Hall, economist at HSBC Securities (Canada). Bank of Canada Governor Mark Carney reiterated Thursday he's sticking to its conditional pledge to hold rates at 0.25 per cent through to the end of June.
And a strong dollar itself, which has gained 3.5 per cent against its U.S. counterpart this year, "may be cause for pause at the BoC as it complicates a nascent recovery that is still very much predicated upon coaxing out continued growth in external demand."
Economists believe the dollar will again hit parity with the U.S. currency as early as this summer or sooner.
It last traded at par in July, 2008, and hit its modern day intraday high of $1.10 in November, 2007.
While some of last month's job gains may be transient -- due to the Olympics -- or short-lived, given that they stemmed largely from the public sector, investors are looking for any good news these days.
"For markets that are contending with sovereign risk and less-than-inspiring growth profiles in other domains of the developed world, upside surprises may seem few and far between, and against this backdrop, the Canadian numbers are able to hit well above their weight class in this morning's market," Mr. Hall said.Report Typo/Error