Loonie roaring up against American dollar

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Every Breaking Wave

Every Breaking Wave

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CBC News said:
The loonie continued its stunning gains Tuesday, climbing .73 to close at 96.48 cents US.

It had been as high as 97.47, its highest level since August 2008.

The loonie rose more than three cents last week and appears to be continuing the trend.

Canadian financial markets were closed on Monday but currency markets continued trading electronically overseas.

The U.S. dollar has weakened against almost all other currencies this year, but its fall is more pronounced against the Canadian dollar because a rally in commodity prices boosted the loonie as well.

Currency trader Ian Cochrane of Calgary-based BNH Strategies told CBC News the Canadian dollar's move reflects market optimism that an economic recovery is taking hold.

"The Canadian currency is seen as a currency that moves up when the world is healthy," he said, predicting parity with the greenback could be close.

A loonie at these levels is "a huge matter," Cochrane said. If the Canadian dollar goes above 97 convincingly, "we would have the possibility of a move to parity very, very quickly."

The 26 per cent appreciation in the Canadian dollar since March, from 77 cents to 97 cents US now, has brought it back to where it was before traders worldwide moved heavily into the American dollar last fall because it was seen as the least risky place to put their money.

Having said that, Cochrane said he expects currency markets are overly negative on the U.S. dollar and that its downward trend may have reached its limit.

The Canadian Manufacturers and Exporters estimates that for every one-cent rise in the Canadian dollar, exports fall by about $2 billion.

PowerShares U.S. Dollar Bullish Fund (showing U.S. dollar against six other currencies) 3-month chart Avrim Lazar of the Forest Products Association of Canada called for the Bank of Canada to take action. "This is not a penny mining stock we're talking about. It's our currency, the foundation of our economic growth," Lazar said.

Most economists agree, however, that the central bank can do little because it lacks the huge reserves it would take to buy up U.S. dollars and counter the selling being done on currency markets.

Prime Minister Stephen Harper said Tuesday the Bank of Canada has ultimate responsibility for the dollar, but that he had no advice for the bank as it must remain independent of the government.

Gold rush
Gold prices have soared with the greenback's plunge. Bullion reached another record on the New York Mercantile Exchange on Tuesday, trading as high as $1,069.70 US an ounce. Cochrane said he believes some of that is people buying the metal as a hedge against a pullback in the stock markets, something he said was not a good idea, given that "gold has run with equities the last few years."

Gold closed Tuesday up $7.40 to $1,064.20.

Global traders generally view the loonie as a commodity-linked currency due to Canada's abundance of natural resources.

An index of commodity prices compiled by Toronto-Dominion Bank notes that commodity prices were up by an average of five per cent in U.S. dollar terms last week.

But because of the loonie's strength, in Canadian-dollar terms the index was up a more modest 2.7 per cent.

The price of oil — which is quoted in U.S. dollars — finished trading at $74.15 a barrel, up 88 cents Tuesday.
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This is why Congress must stop spending NOW until we get the dollar straightened out before we end up with money that is completely worthless.
 
yay My loonie is gonna be worth more than your dollar now :yahoo:

Time to go to Buffalo,New York or NYC or Seattle for some shopping frenzie :-D
 
Arcane Mind said:
This is why Congress must stop spending NOW until we get the dollar straightened out before we end up with money that is completely worthless.
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I agree. Let's get out of Iraq. Major cash saver.
 
Universal healthcare is key to long-term econmic wellness of our nation.


And gold 1000 dollars an ounce... im currently saving pure gold.maybe in a few years 1 gram of gold will equal 1000 dollars...im personally waiting for that day 2 happen...
 
Honestly, I'm not sure how we can solve our economic problems, especially the dollar issue. If we don't spend money, nothing gets done. If we spend money, we get a larger deficit. Even if we did pull out of the Middle East it wouldn't solve anything.
 
Arcane Mind said:
This is why Congress must stop spending NOW until we get the dollar straightened out before we end up with money that is completely worthless.
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No, that'll only deepen the recession.

The dollar is artificially overvalued by a number of countries that are very happy when its value is high. Beyond the feel-good power of a strong dollar, there's no real economic sense for the dollar to be valued as highly as it is. A drop in the dollar will raise the import/export ratio closer to something sustainable. And that's a good thing!
 
And when the Dollar loses value, the American people suffer.

What does a low dollar mean for say, someone like my grandmother? It means that her retirement is worth less money. For someone like me, meeting ends meet becomes more difficult.

A weakening dollar is not good for this country.
 
Arcane Mind said:
And when the Dollar loses value, the American people suffer.

What does a low dollar mean for say, someone like my grandmother? It means that her retirement is worth less money. For someone like me, meeting ends meet becomes more difficult.

A weakening dollar is not good for this country.
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It wouldn't be good for any country.
 
That's not completely true; a weak dollar makes it easier for America to export and harder for them to import. It's one reason why the government of Canada is usually none too happy to see our two dollars at near-parity level; a weaker CND helps our trade balance.
 
Evil Figment said:
That's not completely true; a weak dollar makes it easier for America to export and harder for them to import. It's one reason why the government of Canada is usually none too happy to see our two dollars at near-parity level; a weaker CND helps our trade balance.
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If them is us, then that's not a good thing. America thrives on imports.
 
And THAT is certainly not a good thing.
 
I HAVE A CANADIAN LOONIE AND C$2 COIN. I'M LIKE RICHER THAN THE PAPER US DOLLARZ. :D :D :D j/k

Still, It's all about the balance of trade and debt appreciation, we've been having this discussion since the whole Gold-Silver debates (AKA Bryan's Cross of Gold speech) during the turn of the 19th Century. During recessions we depreciate the value of money to artificially lower debt levels and appreciate it during good times. It's that way~
 
Arcane Mind said:
No, no more of this social welfare spending. In other words, end tax cuts for the rich.
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fixed

Worrying about the value off the dollar is how Hoover sank us into the Great Depression. If we tried to strengthen the dollar, it would make personal debt even more insurmountable and send us straight into another wave of foreclosure. A weakening dollar also improves the chances of American industry against imports. So, this isn't terrible at all.
 
I'm mixed overall on what the dollar's strength could/should be. Obviously, for exporting-oriented economies (Canada, Japan, etc.) a low valued currency is desired, but that also makes spending poor and depresses wages.
A strong currency may be a better thing for service-oriented economies (U.S, Europe, etc.), as it'll boost wages and spur spending.

Debt problems are because of the government, so paying it off instead of spending 40+% on 2 socail programs would go a long ways.

And the U.S. does export a ton of stuff each year (I believe we're #3 behind Germany and China, but we are ahead of Japan by a bundle), the problem is the importing of a bunch of stuff that aren't usually produced in a developed economy (Clothes, toys, etc.)
 
The thing about a weak dollar is that there's weak, and then there's weak. Weak is okay - like people mentioned, it helps our trade deficit, among other things. Weak, on the other hand, is very bad - that's when countries lose faith in the dollar and start abandoning it as a reserve currency, or worse, start selling it. If that happens, this country is in for decades of pain.
 
There has been talk that Oil would no longer be traded in dollars. If that happens, then we are, in a word, screwed.
 
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