- Category: Economic
- Published Thursday, February 25, 2016
- CTV News
TORONTO -- The Canadian dollar surged Thursday, gaining more than three quarters of a cent in a possible sign that investors may be questioning whether the currency has been undervalued this winter.
"We're seeing a general bounce-off of those January lows," said Gareth Watson, vice-president of investment management and research at Richardson GMP Ltd. "Maybe it's just some recognition in the market that the Canadian dollar got oversold."
On Thursday, the loonie soared by 0.79 of a cent to settle at 73.85 cents US. At its lowest point this year -- Jan. 19 -- it traded at 68.69 cents US.
Watson said that an almost five-cent swing since then shows that the currency is doing "extremely well" against a U.S. greenback that is weakening.
In the short term, he expects the Canadian dollar to continue to trade in the 70- to 75-cent US range, but wouldn't be surprised if it lands below that if commodity prices erode even further or there's a major hike with interest rates from the central banks.
Last month, Bank of Canada governor Stephen Poloz held off on lowering its trend-setting interest rate of 0.5 per cent as a way to help the struggling economy.
Poloz said the decision was made after the bank factored in the federal government's pledge to pump tens of billions of dollars into infrastructure projects over the coming years.
Meanwhile, on the stock markets, investors seemed to shy away from broad moves as the Toronto Stock Exchange ended the day relatively flat.
The S&P/TSX composite index added 13.33 points at 12,753.60 as rising financial stocks balanced out lower metal stocks.
"You're not seeing a heck of a lot of movement ... nothing guiding this market higher or lower," said Watson.
Two Canadian banks reported their latest earnings on Thursday, stating that they both experienced first-quarter earnings growth despite declines in the oil industry and a slowing economy.
TD Bank (TSX:TD) reported net income of $2.22 billion, up roughly eight per cent from a year ago when it reported $2.06 billion in quarterly profits, while CIBC (TSX:CM) saw its quarterly profit climb six per cent to $982 million, from $923 million previously.
The news was enough to make the financial sector the highest gainer on the TSX, up 0.67 per cent.
Wall Street was firmly in positive territory with the Dow Jones industrial average was ahead 212.30 points at 16,697.29.
The broader S&P 500 composite index climbed 21.90 points at 1,951.70 and the Nasdaq composite index jumped 39.60 points to 4,582.21.
On the commodities front, the April contract for crude oil slipped 92 cents at US$33.07 per barrel.
The April gold contract lost 30 cents to US$1,238.80 a troy ounce and April natural gas was down five cents at US$1.79 per mmBtu.
May copper dipped three cents to US$2.07 a pound.