Canadian dollar tops 90 cents

TORONTO — The Canadian dollar cracked 90 U.S. cents on Tuesday, setting a new 28-year high and helping Canadians to realize cheaper U.S. imports of everything from vegetables and clothing to computers.

The loonie rose to 90.38 cents, up more than half a cent from Monday’s close and its highest level since 1978, when Pierre Trudeau’s Liberal government ran the country and disco was still king.

The currency had an intraday peak of 90.42 cents, as the American greenback weakened against most foreign currencies and investors remained optimistic about the Canadian economy and robust oil and gold prices.

The recent currency rise has been pushed by expected interest rate hikes in Canada and a sliding U.S. dollar, but on Tuesday it was stronger commodity prices that took over, propelling the loonie up against the greenback and also against several overseas currencies.

“Canada continues to just grind along,” said Steven Butler, director of foreign exchange at Scotia Capital.

“It’s still just decent demand, pretty broad-based as well.”

“I think we might have a try at $1.10 (Canadian) at some point, just from the way it’s trading, but I definitely think the market’s getting overextended,” said Butler.

Many analysts are predicting the loonie could soon hit 95 cents or even be on par with the U.S. dollar, something that hasn’t happened since the 1970s.

But while the Canadian dollar’s increase was good news for Canadians traveling to the United States and Canadian businesses importing machinery and other goods, economists warned it is sure to squeeze exporters in the country’s industrial heartland of Ontario and Quebec.

“The guy on the street who is thinking of going to the U.S. this summer is going to feel a whole lot better because purchasing power has gone up a lot,” said Warren Jestin, Scotiabank’s chief economist.

“In terms of manufacturing and jobs, it’s not good for Ontario because we are so focused on the U.S. marketplace — roughly 90 percent of our exports in the province go there,” Jestin said.

That’s because a higher loonie pressures profits for manufacturers — one of the nation’s largest employment sectors — which could result in the loss of thousands of jobs.

The Canadian dollar has not traded above 90 cents since February 1978, but closed just shy of that mark in November 1991.

It hit an all-time high against the greenback on April 25, 1974, at $1.04.