XPost: misc.invest.canada, soc.culture.canada, can.ai 
 XPost: can.general, can.politics, soc.culture.quebec 
 From: abc@a123.ca 
  
 Loonie soars to three-year high 
  
  
 BY ERIC LAM 
  
 The Canadian dollar appreciated to 102.02 US cents , the strongest level 
 since March 2008, as crude oil advanced. 
  
 The Canadian dollar jumped one-third of a cent to a new three-year high 
 above US$1.02 Friday morning even as oil prices have begun to stabilize 
 on news Saudi Arabia intends to make up any supply disruptions out of 
 Libya. 
  
 The loonie touched US$1.0203 at about 8 a.m. ET, its highest level since 
 March 2008. 
  
 A major driver for this new strength is weakness in the U.S. dollar, 
 Camilla Sutton, currency strategist with Scotia Capital, said in a report 
 Friday. 
  
 "The U.S. dollar has managed to weaken in the face of rising risk 
 aversion as rising oil prices are playing into several market fears," she 
 said. 
  
 €The first is how it will impact global inflation and how central banks 
 will react to it ... In addition, rising oil prices will weigh on the 
 fragile U.S. recovery, which in turn could support an extended dovish 
 stance from the Fed,€ Ms. Sutton said. 
  
 Currency markets are keeping a keen eye on the Bank of Canada rate 
 announcement on Tuesday. 
  
 €The Bank of Canada€s interest rate decision and statement will provide 
 significant insight in to whether or not the market is correctly pricing 
 the risks of a BoC hike this spring,€ Ms. Sutton said. 
  
 All 39 forecasters surveyed by Reuters predicted the Bank of Canada would 
 keep its key interest rate on hold at 1.0% on Tuesday. But 24 of poll 
 participants, more than 60%, expect interest rates to rise by the end of 
 the first half. The median forecast points to a quarter-point increase on 
 May 31 to 1.25%. 
  
 But the strength of the currency will be a key factor in the bank€s 
 decision. 
  
 In its January rate statement, the bank said the persistent strength of 
 the currency, combined with Canada€s low productivity, was holding back 
 the export recovery and contributing to a widening of the current account 
 deficit. 
  
 In subsequent speeches, bank officials have suggested they are resigned 
 to the strong currency as a permanent feature, urging companies to not 
 base their business models on a weaker Canadian dollar. 
  
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