© Reuters. FILE PHOTO: The Canadian dollar currency, otherwise known as “Canadian,” is featured in this illustrative photo taken in Toronto on January 23, 2015. Photo: Mark Blench/Reuters
By Fergal Smith
TORONTO (Reuters) – The Canadian dollar rose to a more than five-week high against the dollar on Monday, on data showing that Canada’s current account surplus turned positive and ahead of an expected interest rate hike by the Bank of Canada later this week.
Canada’s current account surplus came in at C$5.0 billion in the first quarter, after a revised deficit of C$137 million in the fourth quarter. It was the largest surplus since the second quarter of 2008.
“We expect continued strength in commodities to support the current account in the second quarter (Q2), although it is offset by a deeper deficit in services as travel fully recovers,” said Shelley Kochik, economist at BMO Capital Markets.
Canadian GDP data, due on Tuesday, could help guide expectations about the Bank of Canada’s monetary policy outlook. Money markets expect the central bank to raise interest rates by half a percentage point for the second time in a row in a fiscal policy decision on Wednesday.
The Canadian dollar traded 0.5% higher at 1.2657 against the dollar, or 79.01 US cents, after hitting its strongest level since April 22 at 1.2651.
This year’s gains came as global stock markets rose and the US dollar fell against a basket of major currencies, as investors bet on a possible slowdown in US monetary policy tightening.
Oil, one of Canada’s largest exports, rose 1.8% to $117.17 a barrel, as China eased restrictions imposed on the emerging coronavirus, and traders price expectations that the European Union will eventually reach an agreement to ban Russian oil imports.
Canadian government bond yields were higher across the curve, with 10-year notes up 3.5 basis points to 2.825%.
(The story omits the eighth paragraph, which shows a false movement in oil prices.)
