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article imageCanadian loonie near parity with US dollar

By KJ Mullins     Nov 10, 2010 in Business
The Canadian loonie's climb to parity with the US dollar should hold steady throughout the rest of 2010 but experts predict that it is vulnerable to a pullback before spring.
According to CIBC's Chief Economist Avery Shenfeld the slumping U.S. dollar and rising commodity prices are set to correct in early 2011. Those factors currently are giving the Loonie more strength.
Shenfeld said in a press release[PDF] that there is no surge of U.S. dollars in the market with trillions of bonds sitting idle deposited by American banks as excess reserves. The Eorozone money supply is growing at a similar pace of the American dollar while the Loonie has been on a faster trajectory.
Shenfeld notes that the reality is suggesting the "US dollar selling in response to quantitative easing has been overdone, making the Euro, Yen and loonie vulnerable to a correction."
Shenfeld says his end of year target for the loonie is 99 cents U.S. and going down to 93 cents by spring.
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