Loonie tops 90 cents

OTTAWA – The Canadian dollar soared above 90.5 cents US Monday thanks to a stronger-than-expected Canadian economy and economic weakness in the U.S.

“Winter dished out its worst, and the trains weren’t running, but there was no derailing Canada’s economy,” CIBC World Markets economist Avery Shenfeld told Canadian Press. “The economy’s surprising resilience… will have both private-sector forecasters and the Bank of Canada upping their targets for first-quarter GDP — which should end up topping three per cent.”

Canada’s economy grew 0.4 per cent in February, double what analysts had expected, and up from just 0.1 per cent in January, Statistics Canada reported yesterday.

The loonie climbed nearly a full cent to a high of 90.51 cents US — half a cent lower than its 30-year high of 91 cents last spring — before slipping back to close at 90.08 cents US, a seven-month high.

Douglas Porter, economist with BMO Capital Markets, explained that the CN strike’s impact on the transportation sector was offset by a boost in trucking, which picked up some of the slack.

But the rising dollar doesn’t bode well for cross-border haulers going forward — nor their customers in the manufacturing sector that export products to the U.S. and bill in American dollars. The higher Canadian dollar erodes competitiveness, while making imports more attractive.

— from Canadian Press