The Canadian dollar surged Friday, briefly cresting above US81¢, as expectations of an imminent Bank of Canada interest rate hike increased ahead of the holiday weekend.
The loonie was trading at an average price of US80.71¢, up 0.94 of a U.S. cent, its highest level since June 2015.
The currency’s sharp movement came as the U.S. reported slightly weak job growth data Friday and after Statistics Canada reported Thursday that the economy blew past second-quarter expectations with growth at an annual rate of 4.5%.
“The Canadian dollar has been exceptionally strong this week and a lot of that is riding on the stronger-than-expected growth results we got yesterday,” said Candice Bangsund, vice-president of Fiera Capital.
“So things are looking pretty bright on the Canadian growth front, and of course after that, markets started to increase their wagers for rate hikes from the Bank of Canada.”
“That’s what really driving the Canadian dollar today,” she said.
It is widely expected the central bank could possibly once again hike its benchmark rate as early as next week.
On Bay Street, the Toronto Stock Exchange’s S&P/TSX composite index fell 20.27 points to 15,191.60 in a broad-based decline that saw most sectors finish in the red excluding base metals and energy.
Energy companies continued to benefit from a small bump in oil prices since Hurricane Harvey roared ashore in Texas a week ago, forcing many oil refineries to shutter due to storm-related flooding.
The October crude contract gained US6¢ to US$47.29 per barrel, marking the second day in a row in which oil prices gained.
Overall, though, Bangsund said it was a fairly strong week for the commodity-heavy TSX, which she said it still up approximately 80 basis points over the past five trading sessions.
South of the border, New York indices were higher after the U.S. Labor Department said U.S. job growth slowed in August, reassuring investors that the Federal Reserve probably won’t raise interest rates again soon.
The Dow Jones industrial average climbed 39.46 points to 21,987.56 and the S&P 500 index gained 4.90 points to 2,476.55.
The Nasdaq composite index, meanwhile, was up 6.67 points to 6,435.33, its second straight day of trading at a record high.
Elsewhere in commodities, the October natural gas contract increased US3¢ to US$3.07 per mmBTU, the December gold contract was up $8.20¢ to US$1,330.40 an ounce, and the December copper contract advanced US2¢ to US$3.12 a pound.
Canadian and U.S. financial markets are closed Monday for Labour Day.