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toolioiep said:
A lot still depends on the Bank of Canada. The consensus opinion seems to peg a good value for the CAD between .75-.80 USD. That seem to be the sweet spot between Resource Extraction vs Industry / IT / Tourism. The CAD may slide below .75 USD temporarily, but given our improved position WRT the USA, barring and major oddness by the Bank of Canada, it shouldn't slide below the 'irrationally low' levels of the Cretien / Martin era, and will probably float in the 'consensus range' after it recovers from the slide.
But don't take my word for it. (The Bank of Canada has been fixated on inflation since the end of the Mulroney / Campbell era, so they're keen on not letting the CAD slide too far or get too high given our import situation. The odd resource bubble aside, The Bank of Canada and size of the Canadian economy means that in the medium term they can do this pretty well.)
According to the Globe and Mail, the Loonie will rebound quite quickly.
http://www.reportonbusiness.com/ser...024/BNStory/Business/home?cid=al_gam_mostview
If you listen to my friend who's in the banking biz and selling American dollars right now, the loonie will also rise back in November. Something to do with Hedge funds and October.
In either case, it's not that the Loonie has fallen persay, it's that the American dollar has risen across the board. (Against the pound, Euro, Aussie dollar)
Once things settle, the structural issues associated with the US's situation will once again drive down the US dollar.
That said, a 75 cent dollar is fine by me.
- Canadian Manufacturing
- Canadian commodities
- Canadian Film industry
- Tourism
all benefit.
Imports will be slightly cheaper, but I don't thing you'll notice that much of a difference. I don't think retailers EVER passed along any savings when the dollar took off.
http://www.reportonbusiness.com/ser...024/BNStory/Business/home?cid=al_gam_mostview
If you listen to my friend who's in the banking biz and selling American dollars right now, the loonie will also rise back in November. Something to do with Hedge funds and October.
In either case, it's not that the Loonie has fallen persay, it's that the American dollar has risen across the board. (Against the pound, Euro, Aussie dollar)
Once things settle, the structural issues associated with the US's situation will once again drive down the US dollar.
That said, a 75 cent dollar is fine by me.
- Canadian Manufacturing
- Canadian commodities
- Canadian Film industry
- Tourism
all benefit.
Imports will be slightly cheaper, but I don't thing you'll notice that much of a difference. I don't think retailers EVER passed along any savings when the dollar took off.
I have never seen the Loonie fall so far so fast.
It has literally gone straight down without any significant bounces.
Who can say where the bottom is or if there will be a meaningful reversal?
Hedge funds need lots of US$ to meet massive amounts of redemptions.
The ensuing unwinding of leverage and lack of liquidity for much of their holdings means that they are selling plenty of everything that they can.
Of course this drives down the prices of what's being sold.
I would be surprised if we don't see several hedge funds collapse and I can't imagine who could bail them out like Long Term Capital Management.
They will likely go the way of Lehman Brothers.
The US$ could rise more and commodities and other currencies could go down more.
I would be surprised if the commodities bull run is over and the rising US$ is sustainable.
I think the fundamentals for the US$ look terrible and gold will soar but who knows when?
It has literally gone straight down without any significant bounces.
Who can say where the bottom is or if there will be a meaningful reversal?
Hedge funds need lots of US$ to meet massive amounts of redemptions.
The ensuing unwinding of leverage and lack of liquidity for much of their holdings means that they are selling plenty of everything that they can.
Of course this drives down the prices of what's being sold.
I would be surprised if we don't see several hedge funds collapse and I can't imagine who could bail them out like Long Term Capital Management.
They will likely go the way of Lehman Brothers.
The US$ could rise more and commodities and other currencies could go down more.
I would be surprised if the commodities bull run is over and the rising US$ is sustainable.
I think the fundamentals for the US$ look terrible and gold will soar but who knows when?
Malibook said:
Nor have I seen it rise so fast when the global banks were investing their debt in commodities and getting away with it (still no arrests).
Gyaos Baltar.
The rise was not even remotely close to being as fast as the crash.Gyaos said:
The Loonie has lost years of gains just in the past few weeks.
I'v seen it go from 96 cents in 6 weeks ago to 78.50 cents to the US dollar today...that is fast, if it keeps falling like it has--and good chance not--I might have a very merry X-mas party in Canada for me 
I mean that would take it to 60 cents by X-mas, highly unlikely but I do recall it at 65 cents years past.
I mean that would take it to 60 cents by X-mas, highly unlikely but I do recall it at 65 cents years past.
You buy Canada, says Mr. Narayanan, who can't believe the way the loonie has been savaged. “The currency is ridiculously undervalued. I can't think of any country in the world that has no fiscal deficit, no trade deficit and no inflation – except Canada. I think the Canadian dollar should go through parity.
“I like the whole Canadian market. I don't particularly dig the banks because I just don't know what's in there [on the balance sheet]. But I'd say virtually everything else is fine.”
There are, however, some things The Smartest Man wouldn't touch. They happen to be the assets the investing masses have flocked to in this crisis: U.S. Treasuries and the greenback. “I don't think it can hold for that much longer.” Once the world has to absorb trillions of dollars in new U.S. debt – watch out. In fact, he thinks the odds of the U.S. having its own currency crisis are “at least 30 per cent.”
http://www.theglobeandmail.com/servlet/story/RTGAM.20081024.wdecloet1025/BNStory/SpecialEvents2/
“I like the whole Canadian market. I don't particularly dig the banks because I just don't know what's in there [on the balance sheet]. But I'd say virtually everything else is fine.”
There are, however, some things The Smartest Man wouldn't touch. They happen to be the assets the investing masses have flocked to in this crisis: U.S. Treasuries and the greenback. “I don't think it can hold for that much longer.” Once the world has to absorb trillions of dollars in new U.S. debt – watch out. In fact, he thinks the odds of the U.S. having its own currency crisis are “at least 30 per cent.”
http://www.theglobeandmail.com/servlet/story/RTGAM.20081024.wdecloet1025/BNStory/SpecialEvents2/
toolioiep said:
I agree. As commodites go so goes the loonie. especially, as has been pointed out, with the flight to 'quality' of equity holders where quality is percieved as US t-bills. I don't think it will reverse, significantly, until the equity market comes back(2010).
I dont think the BOC is concerned about the loonies drop because of the hope that manufacturing, tourism etc... may recover to help bail out the potential commodity plunge.
chiller_boy said:
Short term yes, but medium term the BOC has the pull. While Canada's economy is 'small' compared to the US, it is still quite 'big' and comparatively diversified by global standards. Short term commodities can send the $CAD for a ride one way or another, medium term the BOC will have its' way.
Also, saving Industry / IT / Tourism is as much about maintaining economic diversity and the tremendous costs associated with trying to re-start these ventures as it is about trying to offset a commodity slide. Disversity is insulation not an offset. Please do remember commodities are still 'high' just not as high. Despite trouble in the financial markets, there are a large number of 'real economies' that are still hungry for commodities, and not just to sell finished goods back to us.
Frankly, there's just not much reason for real doom and gloom in Canada. Things here won't be peachy over the next little while, but by comparison we're well off. I detest the Conservatives, but I actually felt bad when Harper made the rookie mistake of aping McCain and saying, "The fundamentals are sound." It might be 'true' in our case, but he picked a hell of a bad line to borrow. Especially given how 'untrue' it is about the US.
The Options Menu said:
Remember that Canada is one of the few countries that have a trade/current acount surplus with a downward trending Debt/GNP ratio...even if we get into deficit to the tune of 20 billion in the next little while, that still is only about 1.5% of our GDP. Compared to most of euroland's 3+%, not to mention the US's 5%, we're not doing too shabby.
