The Canadian dollar closed unchanged on Tuesday, unable to find direction amid a dearth of market-moving Canadian economic data.
The loonie ended the day at 93.66 cents (U.S.).
A number of factors, including rising inflation, a better American economic climate and rising oil prices, have helped push the currency to the 94-cent mark in recent weeks and close to its highest point so far this year.
But the currency pulled back Monday after the Bank of Canada released its summer business survey.
The survey, which was slightly more pessimistic that the bank’s previous reading in April, showed executives at 100 Canadian corporations remained confident about future economic activity but were still cautious when it came to investment and hiring.
“The loonie is a perplexing quagmire for [Bank of Canada Governor Stephen] Poloz who has tried to talk down the value of the loonie,” said Craig Jerusalim, a portfolio manager at CIBC. “It really needs to stay closer to the 90-cent U.S. level for it to have a long, sustainable positive effect on trade and manufacturing in Canada.”
Poloz has been depending on a weakened Canadian dollar to help drive exports and aid in Canada’s economic recovery.
Jerusalim said that if the loonie continues to climb, or even reach parity with the U.S. dollar, it will be at a level “out of whack” with the current faster pace of recovery in the U.S., which would inevitably lead to a renewed weakening.
He forecasts that the Canadian dollar will fall to the 90-to-92-cent range over the next 12 months.
Meanwhile, commodity prices were mostly lower, with August crude dipping 13 cents to $103.40 a barrel.
August gold bullion lost 50 cents to $1,316.50 an ounce, after posting gains earlier in the day, while September copper was unchanged at $3.26 a pound.
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