RBC Capital Markets sees loonie topping 96 cents US this summer
Wed May 30, 11:49 AM
TORONTO (CP) – RBC Capital Markets is raising its target for the Canadian dollar.
The investment banking division of the country’s largest bank now expects the currency to hit 96.15 cents US by the end of September. The loonie hasn’t been above 96 cents since early 1977. The currency, currently just above 93 cents, is up about eight per cent so far in 2007 as traders anticipate rising interest rates in Canada and lower rates in the United States.
The Bank of Canada fed this speculation Tuesday when it strongly hinted that a rate hike may be necessary in the near term to curb inflation.
RBC thinks the central bank will raise rates three times this year by a total of three-quarters of a point, with the first hike coming in July.
The central bank’s key rate now stands at 4.25 per cent.
The currency has also been supported by strong Canadian economic data, higher commodity prices and corporate takeovers that raised demand for Canadian dollars.
