Loonie hits 104 cents US as greenback falls

The Canadian dollar briefly pushed above

104 cents US Friday, the highest it has been

 since mid-1974.

By 10 a.m., the loonie settled at 103.8 cents US, up 0.27 of a cent from Thursday’s close.

The dollar dropped last Monday, closing at US$1.02, after Bank of Canada Governor David Dodge said last weekend the currency’s recent surge was “abnormally quick.”

But since then, the loonie has managed to rebound strongly.

“There will be a deadening effect by a higher dollar,” BNN’s Michael Kane said Friday.

“That does put pressure on the Bank of Canada to cut rates to keep the economy going and that would pull the dollar down.”

Camilla Sutton, currency strategist at Scotia Capital, told The Canadian Press the U.S. greenback should weaken further next week as the U.S. Federal Reserve is expected to cut interest rates.

Traders and markets are expecting the bank to cut its benchmark rate from 4.75 per cent next week.

This is the first red ink this company has spilled in half a century. That has currency traders nervous. They’re selling the U.S. dollar and they’re buying the loonie.

While the strong loonie may be good for cross-border shoppers in Canada, the trend continues to hurt manufacturers, who export most of their products south of borde.

Some analysts predict the loonie could reach US$1.10 in 2008 or 2009, while others suggest a slowdown in the global economy will pull it back to about 96 cents US.

Meanwhile, the euro also reached another record high versus the U.S. currency on Friday. The U.S. greenback, however, did rise against the yen.

The Canadian dollar, often considered a “petro-currency,” is strongly influenced by the price of oil — which soared Friday in Asian trading.

Crude oil prices spiked above US$92 a barrel at one point, caused by tensions in the Middle East and renewed concerns about oil supplies.