DOLLAR STRENGTHENS TO 80 CENTS U.S. FOR THE FIRST TIME IN MORE THAN A YEAR.

BREAKS THROUGH 80 CENTS U. S. IN EARLY TRADING MONDAY

TORONTO • The loonie broke above 80 cents U. S. Monday for the first time in more than a year amid a weakened U. S. dollar and further signs of a strengthening Canadian economy.

After steadily rising for weeks, the Canadian dollar crested above the threshold in morning trading and was bobbing around that level about an hour before markets were to close at 4 p. m. ET. It closed at 79.92 cents U.S.

The currency has gained nearly 10 per cent since early May, fuelled by brightening economic prospects in recent months that prompted the Bank of Canada to raise its key benchmark interest rate earlier this month for the first time in close to seven years. The dollar hasn’t closed above 80 cents US since June 30, 2015. There’s a 79-per-cent probability that policy makers led by Governor Stephen Poloz will increase rates again this year, according to overnight index swaps data

Earlier Monday, Statistics Canada reported that wholesale sales hit a record high in May as they climbed 0.9 per cent to $ 61.6 billion. Economists had expected an increase of 0.5 per cent, according to Thomson Reuters.

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

“Anyone importing or consuming imported goods could be seeing relief on the price front,” he said. “On the flip side, anybody who is exporting is going to have to lower their prices to remain competitive with foreign competitors.”

A stronger loonie will also likely encourage more Canadians to travel south of the border, he added.

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

“A lot of good news is already priced in at this point,” he said.

“It’s difficult concocting what else will help it continue to rise.”

Osborne noted that 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.

“Robust fundamentals along with a central bank that’s not exactly rowing back expectations of rate hikes to come are the two key culprits here,” said Bipan Rai, Torontobased senior foreign-exchange and macro strategist at Canadian Imperial Bank of Commerce.

But the greenback can strengthen if the U.S. Federal Reserve continues on its interest rate hike schedule this year.

Oil prices, which also heavily influence the Canadian dol- lar, have been stuck between US$40 and US$50 per barrel in recent weeks. Expectations are that crude prices will continue to stabilize, which would mean the Canadian dollar will not find additional support from the commodity.

“It’s going to be difficult for the Canadian dollar to advance at its current pace without more significant news and it’s difficult to see where that news is going to come from,” said Osborne.