The Canadian dollar crept closer to U.S. parity on Friday than it has been in 30 years, at one point reaching a high of 91.94 cents US.
It ended the day at 91.79 cents US, the loonie's highest level since Oct. 11, 1977.
The currency's gain came on the heels of a 0.43-cent rise Thursday, triggered by a hotter-than-predicted inflation report for April.
The numbers on Thursday and Friday were expected to put pressure on the Bank of Canada to raise interest rates, which have remained static at 4.25 per cent since last May.
"If there was any uncertainty about what the next move would be by the bank, I think yesterday's higher than expected inflation data put everybody on the same page in terms of anticipating the next move would be tightening,'' said George Davis, senior technical analyst at RBC Capital Markets.
Michael Kane, of the Business News Network, told 愛污传媒net the flurry of retail activity has helped drive the dollar.
Friday's rise comes as a Statistics Canada report said retail sales were up 1.9 per cent in March, hitting $34 billion and boosting the sales gain for the first quarter of 2007 to two per cent.
Meanwhile, the Toronto Stock Exchange barely moved Friday as lower financial stocks offset higher resources and telecom shares.
This year alone, Canadian dollar has gained almost 7 per cent against the greenback -- one of the strongest performances by any major currency.
Some expect the currency could eventually hit par or even surpass the U.S. dollar, with the world interested in Canadian resources -- from oil and natural gas, to nickel, zinc, wheat and petrochemicals.
But it isn't all good news for the stock market.
The high dollar could result in job losses in the manufacturing industry and makes Canadian exports more expensive, prompting some skepticism among investors.
"It goes back to the same thing: what does it do to manufacturers in Ontario and Quebec?'' said Julie Brough, assistant vice-president at Morgan, Meighen and Associates.
"We're continuing to see job losses there -- it seemed to have stabilized a bit but this next move up could be very very hard on manufacturing in Central Canada -- particularly when we certainly have seen a bit of a slowdown in the U.S."
With files from The Associated Press
