The Globe and Mail

Here's a look at what's lifting the loonie:

Hope:

Last week's rosy economic outlook by the Bank of Canada – it declared the recession over – helped boost the dollar CAD/USD-I . Currency markets shrugged off Bank of Canada Governor Mark Carney's caution that a high dollar could hamper the recovery, focusing instead on his comment that Canada is emerging from the recession in much better shape than most other industrialized nations.

Currency traders are betting that a U.S. recovery will spark a global recovery “and Canada will be the beneficiary of that,” Bank of Nova Scotia currency strategist Camilla Sutton said this week.

Rocks and crude:

As a commodity-based currency, the loonie tends to rise when global economic activity picks up, spurring demand for oil and other commodities produced by Canada. Crude oil CL-FT was trading in the range of $67 (U.S.) a barrel Tuesday and is up about 50 per cent this year. Copper HG-FT is up by 81 per cent. An index of global commodity prices has risen by nine per cent. The dollar CAD/USD-I ? Up by 12 per cent.

The U.S. dollar:

Good news about the economy is bad news for the U.S. dollar XDE-I , which fell Tuesday to its lowest level since December. Investors regard the U.S. dollar as a “safe-haven” currency in times of international financial market turbulence. In risky times, financial investors tend to reallocate their portfolios into U.S dollars because of the high level of liquidity and diversity of U.S. dollar financial assets, Deutsche Bank said in a research report.

Risk? Bring it on:

Investors have returned to the markets and, typically, there is a correlation between stock market performance and the Canadian dollar. Why? The country's main index, the S&P/TSX composite, is commodity heavy, especially oil. And investors sell U.S. dollars to buy stock. (See above.)

What's next?

Many economists are predicting the Canadian dollar could reach parity with the greenback before the end of this year. Snowbirds rejoice. Exporters, not so much.