Loonie climbs to highest level in 2016
Investors continued to ride a wave of positive sentiment following the latest comments from the U.S. Federal Reserve, with the Toronto stock market advancing for a third straight session Wednesday and the Canadian dollar climbing to its highest level of the year.
The S&P/TSX composite index added 77.75 points to 13,503.98, helped by gains in the financials and real estate sectors.
The loonie also continued to strengthen, rising 0.59 of a U.S. cent to 77.13 cents US, a day after Fed chairwoman Janet Yellen said the central bank will proceed with caution on any interest rate hikes this year.
The dovish comments in which the Fed reitereated its go-slow approach on interest rates weighed on the U.S. currency and helped buoy commodity markets. The last time the Canadian dollar was at this level was in October 2015.
“(The comments are) taking some pressure off the U.S. dollar,” said Michael Greenberg, a portfolio manager at Franklin Templeton Solutions.
“In the last little while, it has really helped commodities, and commodity-related currencies like the Canadian dollar.”
Commodities were mixed as the May contract for North American benchmark crude oil was up four cents at US$38.32 a barrel, while May natural gas added two cents to US$2.00 per mmBtu. June gold fell $8.90 to US$1,228.60 an ounce and May copper slipped two cents to US$2.19 a pound.
Low interest rates have helped fuel strength in equity markets since the so-called Great Recession, keeping money flowing into equity markets.