After scoring 11 1/2 year highs vs. the U.S. dollar in late 2004, the Canadian dollar has backed off those lofty levels in the first half of 2005. The surge in the greenback has played a part in the decline of the U.S. dollar/Canadian dollar (USD/CAD) rate, but internal Canadian dynamics also have contributed to the depreciation in the Canadian currency.
Given the stronger U.S. dollar, the Bank of Canada’s (BOC) concern for significant currency appreciation, and the negative interest rate differential between Canada and the U.S., the $1.17 USD/CAD level set in November 2004 may represent an important top for the Canadian dollar vs. the U.S. buck, analysts say.

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