Loonie Surges as Traders Bet on Earlier Interest-Rate Hike
- Currency is biggest gainer vs U.S. dollar among G-10 peers
- Yields on Canada bonds rise along with wagers for rate hikes
Canadian dollar banknotes are displayed in an arranged photograph in Toronto, Canada, on Monday, May 30, 2016. Canada's biggest banks forecast that more than twice as many of their energy loans will go bad as they had expected just a few months ago, after a recent rally in oil prices comes too late for some struggling companies to pay their obligations.
Photographer: Brent Lewin/BloombergThe loonie soared after Canada’s economy accelerated more than forecast in the second quarter, boosting bets the central bank will increase rates for the second time this year -- possibly as early as next week.
The Canadian dollar rose 1.1 percent to C$1.2483 per U.S. dollar at 4:09 p.m. in Toronto, reversing earlier losses to be the top gainer among its Group-of-10 peers on Thursday. Yields on the country’s federal government bonds advanced as the likelihood of an interest-rate increase this year edged up to 79 percent, according to overnight index swaps data compiled by Bloomberg. Investors see a 40 percent chance of a hike on Sept. 6, and 70 percent in October.