The loonie has made significant gains to reach 97.27 cents US during this morning's trading. Contributing factors include high crude oil prices, Canada's biggest export, and a sliding US dollar.

In June, the loonie was propelled by increases in equity markets and commodity prices and a declining US dollar. In August, the Bank of Canada stepped up its campaign to counter the ascent of the Canadian dollar. Today, according to the Financial Post, "The Canadian dollar gained 2.5% against the greenback in the past five days for the second-best performance among the 16 most-traded currencies tracked by Bloomberg, after the Mexican peso." The loonie is expected to reach parity with the greenback in the coming weeks.

However, Canadian exporters are anxious; a strengthened loonie causes Canadian goods to be less competitive in international markets, markets that are already suffering from a lack of demand, which will hurt economic recovery. Trade associations estimate that Canadian countries could lose 25,000 factory jobs for every one-cent increase in the loonie against the US dollar. As the Toronto Star writes: "Canadian exporters, who ship more than three-quarters of their goods south of the border, are worried that higher prices for their US customers will mean lost sales just as they are trying to emerge from the recession."

Canadian retailers are also bracing for a possible consumer backlash against price gaps between Canadian and US goods: "Retailers in Canada understand they are serving customers without borders," said Mark Beazley, spokesman for the Retail Council of Canada. "With fierce competition in Canada, across the border and online, retailers know that they will have to work harder than ever to remain competitive as the loonie rises against the U.S. dollar." (Toronto Star)

Related:

• In the News: Loonie key to improving trade balance: Flaherty
• In the News: Loonie soars to year-high
• Network Experts: Monetary Policy
• Op-ed: Has parity killed monetary union?
• Past Feature: More bang for your buck... (or loonie)?
• PNA in the Classroom: Monetary Convergence between Canada and the United States: A Critique of the Official View

(Image credit: Flickr user Astro Guy)