The Canadian dollar has been on the rise for seven days straight, reaching 0.81 USD, its highest level since 2018. Economists refer to the figure as a sweet spot, as it is a number that helps consumers but doesn't negatively affect businesses just yet.
Canadians have continued to purchase goods imported through the United States, even with the ever-enduring US-Canadian border restrictions intact. The pandemic has disrupted several consumer trends that accompany a surging Canadian loonie, namely shopping and tourism.
As the use of retail e-commerce becomes more and more popular, Canadians are more likely to purchase from American companies online. BMO Financial Group chief economist Douglas Porter believes the state of the Canadian lumber industry could further the strengthen the loonie's stability.
“There’s a lot of things that are driving the currency, but probably Number 1 is just the widespread strength we’re seeing in commodity markets,” said Porter, saying high wheat and copper prices have contributed to the strengthening dollar. “All kinds of things that Canada exports are at record highs or at multi-year highs," he added.
Some analysts believe the exchange rate does not fully illustrate Canada's economic stability, that it still has room to grow in the immediate future.