Currency rise almost a cent as central bank signals the economy and inflation are heating up
The Canadian dollar (CAD/USD-I0.970.0080.79%) hit a six-week high Tuesday after the Bank of Canada signalled the economy is running at a hotter pace than it had anticipated.
The currency strengthened almost a cent, to 96.93 cents (U.S.) from Monday's close of 96.01 cents. The move comes after the loonie rose a full cent Monday as a report showed the economy grew by a greater-than-expected 5 per cent in the fourth quarter.
It extended gains Tuesday as traders bet the central bank will begin to hike aggressively starting in July.
“The level of economic activity in Canada has been slightly higher than the bank had projected” in its January statement, the bank said. As well, “core inflation has been slightly firmer than projected, the result of both transitory factors and the higher level of economic activity.”
