Canadian Dollar Top Performer on Interest Rates Outlook

The Canadian dollar advanced for a third day in a row after favorable reports showed improving economic conditions in the North American nation, suggesting that interest rates in the country may be hiked sooner than expected.

The loonie is ranking among the preferred bets among investors in currency trading this week before a gross domestic report to be published tomorrow indicating a further growth for the Canadian economy according to most of analysts, adding evidences that borrowing costs can be elevated by the Bank of Canada sooner than expected, helping the loonie to gain not only versus its presently strong U.S. counterpart but also versus all of 16 main traded currencies in foreign-exchange markets. The U.S. economic resilience, more evident during the past few weeks as economic data provided optimism regarding the nation’s outlook is also helping the Canadian currency to become more attractive, as the United Stated tops the list of Canada’s trading partner in absolute numbers by far.

The GDP data, if confirmed, will provide support for an extended rally to unveil for the loonie, according to analysts. Less attractive currencies like the pound and the euro are likely to post the sharpest losses versus the Canadian dollar in the short term.

USD/CAD traded at 1.0558 as of 17:23 GMT from a previous rate of 1.0626 yesterday. CAD/JPY went uphill to 86.82 from 85.65.

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