RTRS: UPDATE 2-Canadian dollar hits parity vs. U.S. dollar
* C$ rises as high as $1.0001
* Parity with US$ last reached in July 2008
(Adds background, quotes, details)
By Claire Sibonney
TORONTO, April 6 (Reuters) The Canadian dollar rose to
one-for-one footing with the U.S. currency on Tuesday, hitting
its strongest level since July 2008, boosted by rising
commodity prices and expectations for higher domestic interest
rates.
At 7:38 a.m. (1138 GMT), the Canadian dollar was at
C$1.0008, or 99.92 U.S. cents. Earlier, the currency rose to
C$0.9999 to the U.S. dollar or $1.0001. CAD=D3
"It's been heading toward parity for weeks and it was
inevitable. There's no surprise," said Jon Gencher, director of
foreign exchange sales at BMO Capital Markets,
"We've been calling to have the prospect of higher rates in
Canada. You have the prospect of higher commodity prices and
it's building to it."
The currency, nicknamed the loonie for the bird depicted on
the one-dollar coin, last reached parity with the greenback on
July 22, 2008, when it hit C$0.9999 to the U.S. dollar, or
$1.0001.
"This time seems to be a more of a sustainable move. I
think for the next little while, we are certainly going to
hover around parity," Gencher added.
Canadian economic fundamentals and an improving
international economic outlook have provided support for the
Canadian dollar as a string of stronger-than-expected data
raised expectations for higher interest rates.
The Bank of Canada has a conditional pledge to hold the key
interest rate at an all-time low of 0.25 percent until the end
of June, provided inflation stays tame, but market players have
begun to price in an earlier rate hike as the economy heats up
fast after the recession. [ID:nN18180760]
"The Canadian dollar remains better placed on almost every
front, including the monetary policy outlook, a healthy banking
system and rising commodities," said Audrey Childe-Freeman,
strategist at Brown Brothers Harriman.
The most recent favorable data was the report on Friday
that showed employers in the United States, Canada's largest
trading partner, created jobs in March at the fastest rate in
three years as private firms stepped up hiring.
[ID:nN01126422]
That followed a stronger-than-expected Canadian gross
domestic product report for January. [ID:nN31248585]
(Reporting by Claire Sibonney, Jennifer Kwan and London FX
desk; Editing by Padraic Cassidy)
