Canadian Dollar Approaches Parity

After a multi-year run-up against the USD, the Canadian Dollar has been relatively quiet of late, gradually inching up but mostly trading flat.  Last week’s release of Canadian retail sales data, a relatively mundane economic indicator, jumpstarted the currency and sent it upwards against the USD.  As a result, Canada’s Central Bank is mulling its first rate hike in over a year, directly aimed at controlling its currency.  In the short term, however, higher interest rates would likely bring more capital to Canada.  With a booming economy and stock market to match, the country has never been more attractive to investors.  Commentators are once again whispering about USD-CAD parity (a 1:1 exchange rate), an event that up until a few years ago, most would have dismissed as impossible. The Star reports:

Canada’s buoyant dollar reflects not just a weakening U.S. currency but a booming economy that is benefiting from higher prices of crude oil and metals like copper and gold, prompting big takeovers in the mining industry from foreign companies.

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