One month ago, almost to the day, the Synergy Merchant Services Blog reported that the Canadian loonie was quickly approaching the U.S. dollar in terms of value. Today, Julian Beltrame of The Canadian Press reports that Canada's dollar has gained three cents on its American counterpart and currently sits at 95 cents U.S.
Statistics Canada reports that a number of factors are involved in this happening. Among them is the fact that 5,000 net jobs were created in September. While this is a considerably modest number, it marks the nation's second consecutive month of employment gain.
The U.S., on the other hand, is experiencing quite the opposite situation in that hundreds of jobs continue to be lost on a monthly basis. The United States, notes Beltrame, has not had any rise in its employment rate in nearly two years.
Shane Enright, a currency stategist with CIBC believes that the loonie is gaining strength based on the world's renewed optimism about the economy, encouraging a higher demands for such things as oil.
“The market has a renewed risk appetite, very similar to what we saw through the early part of 2007,” says Enright.
Douglas Porter, a Bank of Montreal economist, predicts that the loonie will be on par with the U.S. “single” in as early as five months.
One other factor, pointed out by Beltrame, that contributes to the notion that one dollar Canadian will soon equal one dollar American, is the Australian national banks have recently increased their interest rates. This has lead to speculation that the Bank of Canada will follow suit.
Evidently, Canada is showing greater signs of economic recovery than the United States, at this point. 95 cents U.S. is the highest value of the Canadian dollar in quite some time. A month ago, economists were predicting the loonie's growth to parity when it hit just over 92 cents U.S.
Will it continue to appreciate? Or is this one of those situations where supposed good news ends up falling flat?