Dollar tops $1.03 US

The Canadian dollar rose to its highest level in 40 months Monday, bolstered by better-than-expected growth in the Canadian economy and by weakness in the U.S. dollar.

The loonie closed at 4 p.m. ET at $1.0294 US for a gain of 0.76 of a cent. In after hours trading later on Monday, the dollar broke through $1.03 US, trading as high as $1.0307. 

It hasn't been that high since it spiked to the $1.10 US level in November 2007.

Statistics Canada reported the annualized rate of Gross Domestic Product rose 3.3 per cent in the fourth quarter after expanding 1.8 in the third quarter.

That was significantly stronger than the 2.3 per cent pace the bank had expected in December and better than the three per cent pace that private sector economists were expecting.

The American currency fell against those of its major trading partners on expectations that comments to Congress by the U.S. Federal Reserve Chairman, Ben Bernanke, on Tuesday and Wednesday will show the central bank plans to stick with its economic stimulus plan.

The Fed has been priming the U.S. economy with a program aimed at keeping rates low and stimulating spending and investment by purchasing $600 billion US in government debt by the end of June.

Traders also sold the greenback on speculation Jean-Claude Trichet, the European Central Bank President, will signal this week a willingness to raise rates.

The Bank of Canada has its regular announcement on interest rates scheduled for Tuesday morning but is not expected to increase the cost of borrowing.

The Canadian dollar may also have been boosted by the news that Equinox Minerals Limited will make an offer to acquire Vancouver-based Lundin Mining Corporation for $4.8 billion in cash and shares.

Equinox would have to buy Canadian dollars to take up these shares.