Loonie briefly moves past U.S. greenback
06/04/2010 1:45:45 PM
CTV.ca News StaffThe loonie moved above the American dollar for a short time Tuesday morning, going as high as US100.12 cents before falling back again.
With the Canadian and American dollars dancing around parity, economists say it's only a matter of time before the loonie rises solidly above the U.S. dollar for the first time since July 2008.
Business News Network's Michael Hainsworth says that could come as early as this week.
"One of the big components that will soon push the loonie over the parity edge will be the jobless data we'll get on Friday from Statistics Canada," he told CTV New Channel Tuesday.
"We are expecting to find out that more Canadians found jobs in the last month than initially anticipated. If that happens, that will reinforce to the rest of the world that our economy is well on the road to recovery following the worst recession since the Great Depression."
Hainsworth and others say there are three key reasons why the loonie is where it is today:
- Canada currently has the strongest economy in the Western world
- the economies of the Eastern world want what we have, i.e. our crude oil
- currency traders are wary of investing in the European Union and the U.S.
The U.S. dollar has tumbled in value in recent weeks, as the American economy has shown more signs of continued instability. In Canada, the dollar has surged as the price of crude sits at a 17-month high, with investors worrying about the prospect of increased demand for oil globally.
That has some economists revising their forecasts and predicting the loonie will hover around parity through the summer.
"Currency traders are telling us today to expect the loonie over the rest of the year to trade anywhere from three to five cents on either side of parity," says Hainsworth. "Some are predicting we'll be well above parity for as long as two years."
