Canadian Dollar Futures (83.72)

I didn't expect the Loonie to challenge its November 2004 high in the area of 85 cents, but that's what it appears to be doing. We are witnessing the anomalous condition where both the Canadian and U.S. currencies are moving higher if one looks out beyond the near term. I'm reluctant to accept this but I have to acknowledge that it could happen. It forces me to abandon the assumption that the Loonie will move lower beyond the near term.

How does one rationalize this? The U.S. Dollar Index is recovering against a basket of currencies of which the Loonie is only a small part. The Canadian Dollar is rallying in spite of federal corruption problems because our commodities sector (in particular our world oil reserve position) is exceptionally strong.