TORONTO – The Canadian dollar powered it’s way past the 78-cent mark Tuesday, buoyed by higher crude prices among new talk of a deal between two big oil producers.
The loonie traded in a range of 77.4 cents U.S. and 78.4 cents, the latter well up from Monday’s close at 77.5 cents, reported Globe and Mail newspaper.
The currency had been gaining on a weaker U.S. dollar, but then shot up further as oil prices climbed on an Interfax report that Saudi Arabia and Russia reached an agreement on freezing output levels heading into a key weekend meeting among producers.
Analysts aren’t quite sure about the credibility of a deal, or what that meeting might bring. But for now, prices are up.
“This week was always likely to see market positioning in advance of the meeting, which has driven substantial gains across the energy sector,” said IG market analyst Joshua Mahony.
“However, given that many of the world producers are pumping less than they did in January, a freeze could even increase the amount of crude being produced.”
Things seem to be going right for the loonie these days, with more stable commodity prices, a stronger outlook for the Canadian economy and lower expectations for how fast U.S. interest rates will rise, said Shaun Osborne, Bank of Nova Scotia’s chief foreign exchange strategist.
Indeed, he said, the loonie could rise to somewhere in the 80- to 83-cent range in the next few months.
“Canada’s economy was battered and bruised in 2015, but already it seems to be exiting its slump briskly,” said Emanuella Enenajor, the North America economist at Bank of America Merrill Lynch.
“As a result, we believe the Bank of Canada will likely have to revise up its growth forecasts in the April monetary policy report (MPR), with Q1 GDP growth set to be raised from 1 per cent to roughly 3.5 per cent.”
