By Chris Fournier and Inyoung Hwang April 6 (Bloomberg) -- Canada’s dollar traded equal to the U.S. currency for the first time since July 2008 on the back of the rising price of crude oil and the prospect of higher interest rates. Canada’s dollar, dubbed the loonie for the aquatic bird on the C$1 coin, last traded at par with the greenback on July 22, 2008, 11 days after crude, the country’s biggest export, reached a record $147.27 a barrel. “Domestic data that’s continued to surprise on the upside coupled with a bullish international backdrop in terms of commodity prices boosts the Canadian dollar,” said Matthew Strauss, senior currency strategist in Toronto at Royal Bank of Canada. The currency gained 0.1 percent to C$1 per U.S. dollar at 6:51 a.m. in Toronto, from C$1.0022 yesterday in New York. The bullish outlook reflects an economy expanding faster than analysts forecast, a reduced budget deficit and rising commodity prices that have spurred demand for currencies tied to growth. “The Canadian economic picture is overall pretty positive,” said Aaron Fennell, a futures and currency broker in Toronto at Lind-Waldock, a unit of MF Global Canada. “Natural resources keep the wind at our back, the commodities boom keeps the wind at our back.” The loonie traded on a one-for-one basis with the U.S. currency in September 2007 for the first time in three decades, capping a five-year run on the back of booming demand for the nation’s commodities. Trade Relationship Canada, the largest trading partner of the U.S., has benefited over that period from rising demand for copper, gold, wheat and oil from the U.S. and emerging economies such as India and China. The country is the world’s largest producer of uranium, the second-biggest exporter of natural gas, and sits on the largest pool of oil reserves outside the Middle East. Canada is also the world’s second-largest exporter of wheat. The currency reached C$1.0062 on March 19, the strongest level since July 23, 2008, after a report showing a stronger- than-forecast gain in consumer prices triggered speculation the Bank of Canada will raise benchmark interest rates before the U.S. Federal Reserve. Bank of Canada Governor Mark Carney signaled on March 24 in a speech in Ottawa that he’s open to increasing interest rates from a record low 0.25 percent as soon as the central bank’s June 1 meeting as inflation and growth outpace forecasts. Target Rate Canada’s economy expanded 0.6 percent in January, Statistics Canada said March 31. That’s the fastest pace in three years in January, and added to evidence that the country is recovering more quickly than policy makers and economists expected. The central bank will boost its target overnight rate by 2 percentage points to 2.25 percent by the middle of next year, according to the weighted average of eight economists in a Bloomberg News survey of economists. Canada is on course to be the first Group of Seven nation to erase its budget gap after the global financial crisis. Finance Minister Jim Flaherty presented on March 4 a budget that forecasts the budget deficit narrowing to C$1.8 billion ($1.78 billion) in 2014 from a record C$53.8 billion last year. To contact the reporters on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net; Inyoung Hwang in New York at ihwang7@bloomberg.net

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