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It’s like the markets and the Bank of Canada are playing tug of war and the loonie is the rope.

The Bank of Canada seems to want the dollar to remain low to give a currency advantage for Canadian exporters looking to sell into the U.S. The market, meanwhile, sees enough strength in the economy to tug the loonie to a higher price.

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At the moment, the market seems to be winning the battle, pulling the loonie to nearly 75.50 U.S. cents at one point Wednesday, up about 2 per cent from last week. Yet Stephen Poloz, governor of the Bank of Canada, earlier this week spoke about the challenges for Canadian exports, and that’s seen as a signal the bank doesn’t want the loonie to get too strong just yet.

The unanswered question is whether the bank will loosen its grip entirely, and let the market haul the Canadian dollar in a firm direction.



The loonie has been on quite the roller coaster ride this year. In January, it charged ahead with one of its fastest rises on record, but by late February it began to falter. It ultimately slid to a year-to-date low of 72.73 U.S. cents on May 4.