The Canadian dollar strengthened as crude oil, key export of Canada, posted the biggest weekly gain since 2009 and as recovering Canada’s economy fueled the speculations about the interest rates hike by the Canadian central bank.
April delivery for crude oil rose 1 percent to $98.28 per barrel after it advanced yesterday to $103.41, the highest intraday price since September 29, 2008. The price jumped 14 percent this week, the biggest weekly advance since February 27, 2009, on the concerns about supply from Libya.
The surge of the resource prices resulted in unexpected trade surplus in December, the first surplus in Canada’s trade balance in 10 months. Morgan Stanley increased its 2011 growth forecast for Canada’s economy from 2.6 percent to 2.9 percent because of the higher exports. The improving economy prompted the forecast that the Bank of Canada will raise the interest rates in the second quarter of this year, perhaps by 25 basis points.
USD/CAD slipped from 0.9824 to 0.9785, while EUR/CAD declined from 1.3558 to 1.3457.
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