Canadian dollar and US dollar are at parity

Something of interest to me being a Canadian and a US citizen. The Canadian dollar and the US dollar are trading at virtual parity It is taking about 1.002 Canadian dollars to buy one US dollar. This is the result of the weaknesses in the US economy, the US wasting a lot of money on the war, the increase in oil and commodity prices which Canada has a lot. The last time the Canadian dollar was stronger than the US dollar was at the end of the Vietnam war.

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The AP also reports on the the Canadian and US dollars reaching parity

Known as the loonie because of the bird pictured on the one-dollar coin, the Canadian dollar has been gaining ground on its American counterpart since hitting an all-time low of 61.79 U.S. cents on Jan. 21, 2002


Bloomberg also discusses the Canadian dollar briefly exceeding the US dollar in value. 1.0002 US dollar equalled one Canadian dollar in intraday trading

How high will the Canadian dollar go? Current guesses are another 2-5 more cents higher for the C$ after a pause around parity. How much can Canada’s central bank lower canadian interest rates to keep the canadian dollar from rising to much ? How much can Canada’s central bank lower interest rates before triggering inflation in Canada ?

Predicting the bottom for the US dollar is

“As we say in foreign exchange, it’s like trying to catch a falling knife.”

Benjamin Tal, senior economist at CIBC World Markets:

The loonie will likely rise a few more cents above the greenback, given its strong momentum that reflects surging commodity prices and the possibility of a recession south of the border, Mr. Tal said.

He does not expect the Bank of Canada to move its rates “anytime soon,” which is positive for the Canadian dollar.

Reid Farrill, executive director foreign exchange at CIBC World Markets:
From a trading point of view the loonie still has momentum, Mr. Farrill said. Parity is somewhat of a psychological barrier, because many traders in the market have not seen it before, and it will take some while for the market to grow accustomed to the new reality, he added.

“It’s all happened very quickly,” said Mr. Farrill, of this week’s surge, which makes predictions difficult.

Ted Carmichael, chief Canadian economist at JP Morgan Chase:
As long as concerns remain about the health of the U.S. economy the Canadian dollar could rise another two to five cents versus its American cousin, Mr. Carmichael said. But it all depends on Canada’s central bank.