Canadian dollar at four-month high

The Canadian dollar continued to gain ground on Thursday and pushed to highs beyond 1.1350 as the US currency remained under pressure with the currency holding strong at around 1.1335 in early Europe on Friday. This represented the strongest Canadian dollar levels since December 2006.

The latest Canadian trade data will be monitored on Friday and some retreat is likely following the higher than expected surplus last month. The surplus will have to be much lower than expected to have a big impact given the greater degree of confidence in the Canadian economy following a stream of positive data. There is, however, the scope for at least a limited corrective retreat from levels below the 1.1350 level given the extent of gains seen over the last week.