OTTAWA – The Canadian dollar surpassed $1.06 U.S. today, the highest level since November 2007.

On top of solid commodity prices, the most recent rally was triggered by signals from the Bank of Canada it could soon hike interest rates, according to several reports.

As well, there is increasing interest from investors to diversify holdings as uncertainty in Europe continues and recovery in the U.S. remains uninspiring.

The Globe and Mail reports that global banks, pension funds and "other major players" seek shelter from the U.S. and Europe.

Forecasters expect this trend to continue and one that will help support the Loonie through to 2012.

Earlier this week, Scotia Capital economists suggested the loonie could run as high $1.10 if the Bank of Canada hikes its benchmark overnight rate sooner rather than later.

However, the turmoil in global markets and steadily rising loonie could threaten other parts of canada’s export-based economy.