The Loonie Bin

Last week the US Dollar hit a record low against the single currency of the European Union known as the Euro. Not only that, but for the first time in more than thirty (30) years the United States dollar reached parity with Canadian loonies.

Unlike in 1976, when Canadian politics sent the loonies reeling, this time it’s a weak US dollar and possible recession that are to blame. However, it would be unfair to blame the US economy without realizing the strength of the Canadian economy and the relatively high commodities prices. For Canadians this means cheaper imports from the States as well as making this a good time for taking a vacation south of the Border. "It's a hallmark of successful economies that they also have strong currencies," Ross Healey, CEO of Strategic Analysis Corp., told CBC News. "Manufacturers may not like it very much, but unfortunately, that's the price we pay for running a tight ship."

Commodity strength powers rise
But it has been the soaring price of oil that has provided much of the fuel for the loonies long flight higher.

In global commodity trading, the price of a barrel of oil was at a record $83.32 USD Thursday afternoon, up $1.39 USD from Wednesday.

Gold prices surged to a 27-year high above $740 US an ounce, further bolstering the Canadian currency. Copper and wheat are at or near all-time highs. Canada produces and exports all of those commodities in abundance and the world has noticed.

Record levels of takeovers of Canadian companies have also lent power to the loonies, as have Canada's big budget and trade surpluses, and healthier housing market.
If it were to one day pass $1 USD. While this is rare for the US currency, let’s see how this will affect the currency markets this week. I assume that the Dollar will bounce back, but how long will it take?
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