Canadian Dollar Continues to Appreciate

Canada’s economy grew at 3.8% in 2005 Q3, marking its fastest quarter of growth in over a year. The Canadian economy has historically been driven by exports of commodities. In this latest quarter, however, retail sales data indicate consumers have started to pick up some of the slack in the economy. As a result, Canada’s Central Bank has hinted that it will further raise short term interest rates from the current level of 3%. Currency strategists will likely remain bullish on the Canadian Dollar, as longs as its economy continues to hum and the differential between Canadian and US interest rates continues to narrow. Bloomberg News reports:

Yields on interest-rate futures indicate traders expect the central bank will raise its benchmark rate a quarter percentage point…on Dec. 6 and Jan. 24. The yield on the March futures contract was 3.86 percent, about the highest this year.

Read More: Canada’s Dollar Poised for Biggest Weekly Advance Since July