I spoke to the CBC on July 20 about the Canadian dollar ahead of the BOC. Everyone was saying a hike was priced in. It wasn’t.
If you’re planning a summertime trip to the U.S., keep a close eye on the loonie next Wednesday. That’s when the Bank of Canada is widely expected to increase interest rates, a move that generally attracts foreign investment and boosts demand for a currency, pushing that currency’s value higher.
The Canadian dollar was worth 77.61 cents US on Friday after rising by slightly more than 0.6 of a cent. Exactly how high could the loonie fly after the Bank of Canada makes its anticipated move?
“There’s still room for the Canadian dollar to gain,” said Adam Button, a currency analyst with ForexLive.com. Button expects the loonie to head close to 78 cents after an interest rate hike, and as high as 80 cents over the following month.
Currency traders started gaining confidence that the bank would finally pull the trigger on interest rates after reading bullish remarks in a speech by Bank of Canada senior deputy governor Carolyn Wilkins on June 12, said Button.
That confidence was reinforced by comments made by Bank of Canada governor Stephen Poloz in a June interview on CNBC, and in a recent interview with a German newspaper.