Given the speed of change, we could see a $1.15 US or $1.20 US [dollar].

Last Updated: Wednesday, November 7, 2007 11:46 AM ET
CBC News
The Canadian dollar continued its lofty flight as it topped $1.10 US on Wednesday, while the U.S. dollar continued to weaken on a signal from China that it might be selling off some of its huge U.S. dollar holdings.
Shortly after the start of trading in North America, the loonie was up more than 1.75 cents US at $1.1027 US. But by 11:45 a.m. ET, it had slipped back to $1.0892 US, still up 0.40 cents US from Tuesday's close.
The latest weakness in the U.S. dollar came after Chinese officals said they want to diversify their $1.43 trillion US of foreign exchange reserves away from the U.S. dollar.
'Given the speed of change, we could see a $1.15 US or $1.20 US [dollar].'—Derek Burleton, TD Bank senior economist
"We will favour stronger currencies over weaker ones, and will readjust accordingly,'' Xu Jian, a Chinese central bank vice director, told a conference in Beijing.
"This is the clarion call for all currency reserve managers around the world that the largest holder of U.S. dollars outside the country is seriously thinking of selling them for other currencies," said BMO foreign exchange strategist Andrew Busch.
The greenback fell to another record low of $1.4703 US against the euro, while the British pound hit $2.1051 US, a level not seen since since May 1981.
Higher oil prices also helped propel the Canadian dollar. The December futures contract for light sweet crude was up $0.87 US at $97.57 US per barrel at 10:20 a.m. ET.
Gold also shot higher Wednesday, gaining almost $22 US to hit $845.30 US an ounce before retreating to $838.40.
The latest advance of the loonie is sending economists back to the drawing board to redo their dollar forecasts. The currency has appreciated much faster than most observers had been expecting.
"I've given up guessing in the short run," TD Bank senior economist Derek Burleton told CBC News on Wednesday. "There's nothing, I don't think, that's going to keep the U.S. dollar from weakening further in the very near term. Given the speed of change, we could see a $1.15 US or $1.20 US [dollar]," he said.
The Canadian dollar regained parity with the U.S. greenback in September. The loonie has been setting new records since Oct. 31, when it topped its previous modern-day high of $1.0614 US, which dated back to August 1957.
Since the start of the year, the dollar has risen by about 24 cents US.