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Briefing highlights

  • Canadian dollar at about 78.5 cents
  • Analysts see loonie higher still
  • How much you can save in U.S.
  • Stock markets at a glance

Don't sneer at 5-1/2 cents.

We're well into the summer holidays, when many of us vacation in the United States, and the Bank of Canada just did us a huge favour by driving the loonie up to about 78.5 cents (U.S.) from the 73-cent area just a short time ago.

Wednesday alone, after the central bank raised its benchmark lending rate for the first time in almost seven years, the currency shot up. It sat this morning at 78.5 cents, and so far today has been as low as 78.34 cents and as high as 78.60 cents.

And it may go higher still, analysts say.

CIBC World Markets, for example, revised its projection after the Bank of Canada's rate hike and better economic outlook, to a three-month target of 80 cents against the U.S. dollar, up from 76.3 cents earlier.

Chatting back and forth via e-mail with Bipan Rai, CIBC's executive director of macro strategy, and Mark McCormick, North American head of foreign exchange strategy at TD Securities, got me thinking about the savings from 73 cents to today. So I did some calculations, based on straight currency conversion with the loonie at 78.5 cents this morning.

These are prices as posted online but, who knows, maybe you can haggle when you get there. Just tell them you're Canadian, and that your money's still not worth all that much:

If you check in Friday and check out Sunday this weekend, a deluxe room for two at the Ritz-Carlton New York Central Park will cost $795 (U.S.) a night, breakfast included. That's about$1,015 in our money, but consider it a bargain compared to the$1,090 you'd have paid at 73 cents.

If deli is your thing, Langer's Delicatessen-Restaurant, just across from MacArthur Park in Los Angeles, is said to offer among the best pastrami sandwiches in the United States. Pastrami and cole slaw will cost you $18.30 (Canadian), again a bargain compared to $19.65.

Or consider what's said to be one of the most unique treats in Major League Baseball, the Chicken Enchilada Dog you eat while watching the Arizona Diamondbacks. That will cost you almost $32, a high price for a dog but not as high as the $34 at 73 cents.

Admission to New York's Metropolitan Museum of Art, deemed the best in America, is just about the same. Bonus: It's not far from Trump Tower.

Two days at Disneyworld's Magic Kingdom would cost a family of four, with two kids above the age of 10, about $500 now, compared to $545.

A seven-day pass to Grand Canyon National Park is actually pretty cheap, about $38 when converted to Canadian for a single vehicle. Consider, too, that that's even cheaper than the $41 before the loonie pushed higher.

Obviously, the more you spend, the more you save. So knock yourself out.

A new block of tickets has just gone on sale for the hit musical Hamilton at the Richard Rodgers Theatre on Broadway. Orchestra Row M seating goes for about $2,845 in our money, but that's down from $3,060.

Or go Mezzanine at $622, compared to $668.

Those prices, by the way, are for Jan. 5. There's such a long lineup, you'd think they're Canadian.

And you don't know where the loonie will be come January.

Analysts believe there's still more life in the Canadian dollar, though much depends on what the Bank of Canada does next, where the Federal Reserve goes, and how oil prices perform. Not to mention other factors that could play into its performance, such as trade talks with the United States.

CIBC's Mr. Rai, like some others, expects another hike of one-quarter of a percentage point in October. That would put the central bank's overnight rate back at 1 per cent, where it stood before two cuts during the oil shock.

"What the bank didn't do is pare back some of the excitement over its first rate hike in seven years," Mr. Rai said in a report.

"For one, the bank brushed aside concerns regarding the low readings on inflation of late," he added.

"Also, the bank appeared to be less concerned with global uncertainties than it was in the April [monetary policy report]. Taken together, this has kept [the U.S. versus Canadian dollar] anchored and the expected 'dovish' hike just didn't happen. This has led to considerable pain for those that had expected the 'take profit' move."

TD's Mr. McCormick also believes the loonie can rise further, though he doesn't expect 80 cents.

"The data-dependent prospects of normalization favour a bit more downside momentum in [U.S. versus Canadian dollar]," Mr. McCormick said, referring to the Bank of Canada's move toward normal from emergency lows.

"However, on many metrics, we look stretched but I'm not sure if that outweighs the near-term momentum just yet," he added.

"The data dependency of the outlook is a huge caveat, though, and gives them plenty of room to back-peddle on broader monetary policy normalization if growth softens or prices fail to recover."

JPMorgan Chase, in turn, now sees the loonie at about 78 cents in the current quarter, but then slipping back to 77 cents by the end of the year and then to around 74.5 cents by mid-2018. So you may want to book those Hamilton tickets now.

"We only tweak [U.S. versus Canadian dollar] forecasts marginally lower over the forecast horizon, and maintain the judgment that CAD offers a relatively less attractive vehicle to express a strategic global policy normalization phenomenon," said JPMorgan's Daniel Hui, referring to the loonie by its symbol.

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