The Canadian dollar broke through the 80-cent US level on Friday for the first time in more than 11 years, fuelled by solid job creation numbers in Canada and weaker numbers in the United States.

The dollar touched 80.01 cents US around 11 a.m. EDT before slipping back to close at 79.87 cents US, up 0.59 cents.

Loonie has risen almost 3 cents since Sept. 20
Loonie has risen almost 3 cents since Sept. 20

The last time the dollar traded at the 80-cent US level was on March 30, 1993. Its last close above 80 cents US was the day before, when it finished at 80.18 cents US.

Friday's big lift for the Canadian dollar came after economic data showed Canadian job creation in September came in better than expected while U.S. job creation figures failed to meet economists' expectations.

The loonie has risen steadily in recent months as commodity prices increased – especially oil. Currency traders note that, as a net exporter of oil, Canada is a net gainer from rising prices.

The loonie has also been helped by this country's balanced budget, which stands in stark contrast to the record $415 billion US budget deficit this year in the United States.

The Canadian dollar has also been goosed higher by recent comments from Bank of Canada governor David Dodge, who warned on Sept. 20 that interest rate hikes are on the way.

The loonie has risen almost 3 cents against the U.S. greenback since Dodge made those comments.

Canadian dollar has risen 29 per cent since early 2002

Taking the longer view, the Canadian dollar has been on a steady rise since its low of 62 cents US in January 2002. At that time, it cost $1.61 Canadian to buy a U.S. dollar. Today, it costs $1.25.

If Canadian interest rates rise faster than U.S. rates, that makes our dollar more attractive to foreign investors and boosts its value.

Phillips, Hager & North economist Patricia Croft said many Canadians consider a higher loonie a feel-good story because of the perceived link between a higher Canadian dollar with a strong economy.

"When you open up your newspaper or turn on your TV and see the dollar through 80 cents, people think, 'Wow an 11-year high on the Canadian dollar, that's great' because there is this emotional tie between the value of a currency and how well the country is doing," she told CBC Newsworld.

Many bank economists expect the Canadian dollar to continue rising in the next year or two to anywhere from 81 to 83 cents US. The National Bank forecasts an 85-cent US loonie by the end of 2006.