The resurgent Canadian dollar pushed its way to the top of the newsmaker list during the week ended June 2, the twenty-second trading week of 2007. The Canadian dollar closed the week up 1.8 percent to a near 30-year high of 94.3 US cents, or an 8.5 percent rise since the start of the quarter. As recently as 2002, the loonie traded at 62 US cents. Economists point to the usual factors for the loonie's strength: a weakening greenback; surging commodities prices; huge capital inflows to Canada from merger and acquisitions activity; and strong operational performances from Canada's basic industries of oil and gas, forestry and mining. While this rapid rise will likely lead to an equally sharp pullback, most forecasters are broadly bullish on the Canadian dollar. Such specialists as CIBC World Markets chief economist Jeff Rubin and National Bank Financial chief economist Clement Gignac are predicting that the loonie will trade at parity with the U.S. dollar within 6-18 months, especially if Canadian interest rates are hiked later this year to dampen economic growth rates at the same time that U.S. rates are lowered.
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