The Canadian dollar soared, touching its highest level in more than 13 years, on expectations surging commodities prices will spur economic growth.
Crude oil prices, which have been tied to the dollar's climb in recent months, jumped by $4.39 (U.S.) a barrel to $67.39 amid concern that a storm gaining strength off the Bahamas could hit U.S. oil facilities in the Gulf of Mexico, causing supply disruptions. A broad surge in commodities prices, such as in gold, lumber and natural gas, also underpinned gains.
“The main reason for today's move is the reaction in commodities markets to the upcoming hurricane Rita,” said Tim Mazanec, senior currency strategist at Investors Bank & Trust. “The power of the loonie remains strong.”
The loonie rose as high as 85.71 cents (U.S.), its highest point since Jan. 24, 1992. The currency closed at 5.57 U.S. cents, up substantially from 84.84 cents on Friday.
Rate expectations also supported gains, as traders bet tomorrow's increase in U.S. interest rates will precede further increases by the Bank of Canada. The Federal Market Open Committee will make its announcement at 2:15 p.m. EDT Tuesday. The Bank of Canada's next rate announcement is Oct. 18.
The loonie is the world's second-best performer over the last three months after the Chilean peso.
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