TORONTO The Canadian dollar rose to one-for-one footing with the U.S. currency on Tuesday, hitting its strongest level since July 2008, boosted by rising commodity prices and expectations for higher domestic interest rates.
At 7:38 a.m. (1138 GMT), the Canadian dollar was at C$1.0008, or 99.92 U.S. cents. Earlier, the currency rose to C$0.9999 to the U.S. dollar or $1.0001.
It's been heading toward parity for weeks and it was inevitable. There's no surprise, said Jon Gencher, director of foreign exchange sales at BMO Capital Markets,
We've been calling to have the prospect of higher rates in Canada. You have the prospect of higher commodity prices and it's building to it.
The currency, nicknamed the loonie for the bird depicted on the one-dollar coin, last reached parity with the greenback on July 22, 2008, when it hit C$0.9999 to the U.S. dollar, or $1.0001.
This time seems to be a more of a sustainable move. I think for the next little while, we are certainly going to hover around parity, Gencher added.
Canadian economic fundamentals and an improving international economic outlook have provided support for the Canadian dollar as a string of stronger-than-expected data raised expectations for higher interest rates.
The Bank of Canada has a conditional pledge to hold the key interest rate at an all-time low of 0.25 percent until the end of June, provided inflation stays tame, but market players have begun to price in an earlier rate hike as the economy heats up fast after the recession.
The Canadian dollar remains better placed on almost every front, including the monetary policy outlook, a healthy banking system and rising commodities, said Audrey Childe-Freeman, strategist at Brown Brothers Harriman.
The most recent favorable data was the report on Friday that showed employers in the United States, Canada's largest trading partner, created jobs in March at the fastest rate in three years as private firms stepped up hiring.
That followed a stronger-than-expected Canadian gross domestic product report for January.
(Reporting by Claire Sibonney, Jennifer Kwan and London FX desk; Editing by Padraic Cassidy)