The Canadian dollar started the month of March on a bullish pattern after policy makers in the country affirmed that inflation is slightly above what the Bank of Canada expected, fueling speculations that interest rates may be hiked in the country anytime soon.
The loonie traded below $1.04 this Tuesday after the Bank of Canada released its rate statement, mentioning a stronger than expected inflation and a higher economic output that led speculators to believe that interest rate raises are likely to follow in the North American country, specially as its southern wealthier neighbor, the U.S., is recovering at a considerably fast pace, and being it the destination for most of the Canadian exports, the optimism regarding the loonie rates rose today.
A mix of diminished pessimism coming from Europe and the hawkish announcement coming from the BOC really made a positive combination for the loonie, according to analysts. The loonie may set new record highs for 2010 versus a number of currencies, specially the British pound.
USD/CAD traded at 1.0344 as of 23:56 GMT from a previous intraday rate of 1.0432. CAD/JPY rose to 85.75 from 85.44.
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