The Canadian dollar closed higher Wednesday amid a generally positive tone on world markets and strengthened commodity prices.The loonie ended the day up 0.11 of a cent to 99.67 cents (U.S.).
Analysts were watching to see if the U.S. and international markets will continue on their paths of record highs, or if the lack of major economic news will result in some pullback.
Ian Nakamoto, a portfolio manager with investment firm MacDougall MacDougall and MacTier, said the Canadian dollar may be fuelled by confidence in the incoming Bank of Canada governor.
Current head Mark Carney will leave the post at the end of this month and be replaced by Stephen Poloz, chief executive officer of Export Development Canada.
“It doesn’t seem like he [Poloz] is changing his stance any time soon in terms of loosening monetary policy or bringing down interest rates even though the Canadian economy does appear to be weakening here,” he said.
“I’m amazed at how strong [the loonie] is. Most economists had predicted the loonie would be vulnerable down to 95 or 96 [cents]. We’re almost back at par here.”
The strength of stocks and the strong Canadian dollar in recent days has been a sign of heightened investor appetite for risk amid optimism that the U.S. economic recovery is gaining momentum.
Meanwhile, U.S. markets continued to take in gains with the Dow Jones industrials average up 13.94 points at 15,070.14, while the Nasdaq rose 13.39 points to 3,410.02. The S&P gained 4.85 to 1,630.81.
Japan’s Nikkei 225 index rose 0.7 per cent to 14,285.69, its highest close in almost five years, and Germany’s DAX also had a record close, up 0.83 per cent to 8,249.71.
On the commodities front, June bullion made up for the $19.20 it lost on Tuesday by surging ahead $24.90 to $1,473.70 an ounce.
July copper was up 7 cents at $3.37 a pound, following strong trade data from China suggesting it is recovering from an unexpected slowing in the first quarter.
Both gold and copper prices are the highest they’ve been in a month. The June crude contract on the New York Mercantile Exchange closed at a five-week high, up $1 to $96.62 a barrel.