Loonie closes just below parity

The Canadian dollarclosed just below parity with the U.S. dollarFriday, after see-sawing above and below that level through the day.

It did so on a day whenthe American dollar made gainson currencymarkets, risingonmuch better than expected U.S. employment news.

However, theloonie was an exception andtradedas high as$1.0010 US before making its Bank of Canada official close at99.96, up .20 of a cent.

"So we received two employment reports, first from Canada, which was disappointing on the headline, but the details were actually fairly firm," said Camilla Sutton, chief currency strategist at Scotia Capital, referring to data showing that 47,000 full-time jobs were added against a loss of 44,000 part-time workers.

"In terms of the U.S. non-farm payrolls report, it was actually much better than expected, which has alleviated some of the fears that softness in the U.S. economy will flow north of the border into Canada."

The Canadian dollarlast traded at par in mid-October.

The loonie is still some distance from its all-time high of just above $1.10 US, reached in late 2007.

Parity could last

Sutton thinks Canadians should get used to the loonie at elevated levels.

"Parity for the Canadian dollar is something that's here to stay for quite some time," shepredicted. "We look at our forecast at Scotia Capital, [and] we have Canada sustainably through parity all of next year."

The loonie has been steadily appreciating against the U.S. dollar since late August, when the first hints emerged that the U.S. Federal Reservewould embark on a massive bond-buying spree to inject more money into theeconomy.

This week, the Fed formally unveiled the details ofits stimulus attempt. Itsso-called quantitative easing program will flood theeconomy with $600 billion US.

The loonie has also been lifted by higher commodity prices especially for oil, gold and copper.

A rising looniemakes Canadian exportsmore expensive for American customers. But italso cuts the cost of imported goods and makes it cheaper to travel abroad.