Loonie on 6-day streak; interest-rate hike looms

TORONTO — The Canadian dollar rose Tuesday for a sixth session in a row, a streak that has been fuelled by an increasingly hawkish tone from the Bank of Canada amid mounting expectations it will raise its key interest rate next week.

The loonie was ahead 0.21 of a cent to an average trading price of 77.27 cents US. The currency has gained nearly two cents US since June 23.

Tuesday’s bump in the loonie came after Bank of Canada governor Stephen Poloz hinted in an interview with a German newspaper that the central bank might be ready to move on the benchmark rate, which has been locked at 0.5 per cent for two years. The next rate announcement is set for July 12.

Senior portfolio manager Steve Belisle said Poloz’s comments, which build upon other remarks he has made in recent weeks, indicate that he’s “pointing in the direction” of a rate hike.

And with the meeting still a week away, there is still a bit more room for the currency to climb.

“It’s gone up quite a bit already,” said Belisle, who works at Manulife Investments in Montreal. “But maybe it’ll move a couple more fractions of a cent.”

He said that in the past few months, many central banks around the world have indicated that they are ready to tighten monetary policy as the global economy continues to show steady signs of improvement.

In equities, Canada’s main stock index was dragged down Tuesday, pulled down by most sectors including gold and materials.

The S&P/TSX composite index fell 51.58 points to 15130.61 after being closed on Monday for Canada Day.

It was quiet south of the border, with U.S. indexes and commodity markets both shut down for the July 4 holiday.