Loonie Looses Traction

An interesting article by the CBC that got me asking some questions which follow below:

Dollar continues slideLast Updated Mon, 16 May 2005 13:02:43 EDT
CBC News
OTTAWA - The dollar's steady slide of the past several weeks continued Monday, as the loonie traded below the 79-cent US level.

The dollar fell almost a third of a cent (0.32 cents) to 78.71 cents US in afternoon trading.
That's the lowest level for the loonie in more than seven months. In just the past month, the Canadian dollar has tumbled by more than 4.5 cents against the U.S. dollar.

The currency has been weakening amid the prospect of an imminent end to the year-old minority government of Paul Martin. A vote on the federal budget is slated for Thursday. If the government loses, the country would face another election in June.

The loonie has also been hit by sliding commodity prices (oil, for example, dropped to a near three-month low of $48.25 US a barrel), and weaker-than-expected Canadian economic data suggest that Canadian interest rates won't be hiked for some time.

In the U.S., better-than-expected deficit figures, retail sales data and employment figures have also helped to give the U.S. dollar new strength.

Since the start of the year, the U.S. dollar has gained more than 7 per cent against the euro.

Now my questions:

• Is it an election that's triggering the slide as the CBC asserts or has it been a gradual decrease over the past year topped off by PM squared's recent spending spree? He did start spending like a mad man within the past month after all.
• When did the euro become the monetary standard by which all other currencies are judged?
• Is the CBC somehow asserting that the Canadian economy also hinges on oil prices? Are they somehow saying that Alberta now has some relevance?

I'm not real big on monetary policy so comments would be appreciated...