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Canadian dollar up after Carney move

The Canadian dollar was higher Tuesday as traders weighed the chances of higher interest rates and higher commodity prices.

There was also relief that Greece has secured another instalment of bailout money to stave off bankruptcy.

The loonie gained 0.18 of a cent to 100.8 cents US a day after Bank of Canada governor Mark Carney surprised markets in announcing he is leaving the central bank to take the top job at the Bank of England.

"The Canadian dollar negative uncertainty over who will lead the bank once Mark Carney moves . . . has been offset by an improvement in risk appetite and an OECD economic outlook report which suggests that the Bank of Canada might need to increase interest rates by the second half of 2013," said Scotia Capital chief currency strategist Camilla Sutton.

"The OECD notes that there is not a large amount of economic slack which could lead to inflationary pressures."

The Organization for Economic Co-operation and Development also said in a new report Tuesday that Canada's economy will grow by 1.5 per cent in the final three months of this year, and advance only 1.8 per cent in 2013.

Next year's projection is half a point below the Bank of Canada's official forecast, although the two institutions agree that 2014 will see an improvement to 2.4 per cent growth.

The Canadian Press

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