Steadily climbing loonie hits 80 cents US

Don’t expect the dollar to rise much more despite the strong economic performance, expert cautions

The loonie hit 80 cents US on Monday, a level it hasn’t closed at in more than two years, against a weakening in U.S. currency and amid further signs of a strengthening Canadian economy. The Canadian dollar, which ended up with an average trading price of 79.92 cents US, up 0.23 of a cent, has been steadily climbing over the last two months.

Since early May, it has added more than seven cents. Its upward march has been fuelled by the Bank of Canada’s decision earlier this month to raise its key benchmark interest rate for the first time in close to seven years.

Isaac Holloway, an assistant professor at the Ivey Business School at Western University, said the gain in the Canadian dollar will have the biggest effect on importers and exporters, though it will likely be months before consumers see the fallout.

Shaun Osborne, chief currency strategist at Scotiabank, said he doesn’t expect the dollar to rise much more despite the strong economic performance as of late.

“It’s difficult concocting what else will help it continue to rise. We’ll see a stabilization in the short run for the Canadian dollar.”

Osborne noted there are a number of factors besides monetary policy that has helped the currency rise.

The loonie has benefited from a lower U.S. dollar, which has been hit in recent months by political uncertainty under the Donald Trump administration.