The powerhouse C$ today reached parity with the US$ for the first time since November 1976, actually touching $1.003 US before easing down a bit.

The Bank of Canada confirmed the milestone, saying the first equal meeting of the two currencies took place in late-morning trading.

The C$, which closed today at 99.87 cents US, has soared more than 60% since 2002, when it was trading at about 62 cents US.

The dollar, which began 2007 trading at about 85 cents US, had closed Wednesday at 98.5 cents US.

National Bank Financial today said the strength of the C$ means the Bank of Canada should be cutting rates at its next meeting.

The currency is trading well outside the range of 93 cents to 95.5 cents US assumed by the central bank in its Monetary Policy Review, NBF notes.

The C$ has already gained 16% vs the US$ year-to-date, and a whopping 5.5% since the start of September.

The strength comes at a time when short-term borrowing costs for corporations continue to rise, NBF adds.

“We estimate that the combined impact of these two developments is equivalent to more than 150 basis points of tightening in monetary conditions since the start of the month (using the BoC’s old rules of thumb),” it says.

“This is an awful lot of tightening in very little time, even for a country with great fundamentals.”

NBF concludes that the central bank should release some pressure and lower rates on Oct. 16.