K Johnson
Moderator 1100 posts Mar 10, 2010
7:53 AM
TORONTO - Expectations of higher interest rates and investor demand for Canada will help drive the Canadian dollar past parity with the U.S. greenback by this summer, says CIBC World Markets. In a report Wednesday, the investment bank notes the loonie has jumped above 98 cents US in recent weeks as investors expect interest rates to rise in Canada later this year. Higher interest rates - the bank expects a jump of three quarters of a point - make Canadian bonds and other investments more attractive and raises demand for the loonie. Other factors that could help the currency are world demand for commodities such as oil, minerals and fertilizers and foreign acquisitions of Canadian companies by U.S. or overseas buyers. On Tuesday, the Canadian dollar rose more than a tenth of a cent to 97.43 cents US, approaching the highest level of the year.
KJ: How does a strong Loonie affect you? or does it matter?
I do alot of business using ebay. Many of those items I purchase come from the U.S. so it that regard, a strong loonie is great. I know there are positives and negatives that go along with it.
In relation to the value of the CDN currency versus the US, it will and does have an effect on what happens in this country. For instance, the forestry industry states that for every cent the CDN is over the US currency, it costs approx $1 Billion in sales of lumber to the US.
With respect to the Shale Gas that has come to identify Fort Nelson as a "mecca" for some firms, the fact that the dollar is at an equal footing onlt serves to keep American Companies in the US which also enjoys a substantial shale gas reserve.
While a strong CDN dollar may be envious on a short term basis, it simply does nothing to help our economy with our largest trading partner.
The recent announcement by EnCana with regard to thier partnership with the Koreans is in itself a smart move as it will insulate us somewhat from the volatile currency markets but I should note this one simple fact.
The strength of a country's currency is based directly on foreign buyers looking to put thier money in a place where they will make a return on the investment. I.e: China buying US Currency. When the investment market stops buying US currency it is due to a lack of faith in the US economy and that simply does not bode well for Canada ever.
For my company the par dollar would be great in the initial months as my buying power in the states is excellent right now but I think the long term effects will be disastrous for all of us. With the morgage rates increasing until they go through the roof we will be heading for a financial armeggedon. Morgage holders will lose their houses left and right. Why because their payments will go from fourteen hundred a month to three thousand a month. With both bread winners working they might be able to handle it but if one gets laid off,which has been happening too frequently lately,help! By the time the lumber industry rebounds, Russia will have their mills in full force and will kill our prices with a better grade of spruce and pine then we have at present. Not to mention the pine beetle and half our wood in B.C. is destroyed. On that note sure hope that we don"t have a dry summer. Our salmon are virtually non-existent and I cannot see the future picture getting any better. Mining may rebound if we are lucky with the world market holding out. I think that the only hope for natural gas is not the Koreans but in our own use. We can use it to fuel our vehicles if we can find a better way of getting more in our tanks. I.E. using charcoal in our tanks to line up the molecules so that the tanks will hold more and thus be more feasible for consumption. We have a lot of financial problems in our country right now and we have to learn to be more dependent on ourselves and not so dependent on our sister country. Only through co-operation with each other will we gain independence and financial freedom.
K Johnson
Moderator 1116 posts Mar 12, 2010
10:11 AM
Update 12 March:
A strong jobs report pushed the Canadian dollar to its highest point in nearly two years on Friday. The Canadian dollar was trading at 98.35 cents US a little before noon Friday, up 0.72 of a cent. That's the highest level for Canada's currency since July 2008.
Earlier in the day, Statistics Canada reported that the Canadian economy added roughly 21,000 jobs in February. Currency traders reacted almost instantly, pushing the loonie up more than half a cent in the minutes following the data.
The knee-jerk rise in the loonie was supported by the fact the underlying data was even stronger than the headline — some 60,200 full-time jobs were created during the month, which was only partially offset by a decline in part-time jobs..
