UPDATE: Canadian Dollar = American Dollar

[sundayx Veteran]

My parents are getting quite annoyed at the moment. It's never going down.

[sn00pie]

now is the time to convert (if your in canada) your canadian dollars into US dollars, i predict the canadian dollar dropping to normal aka 90 cents US in the VERY NEAR future. ;)

[+Mirumir Subscriber¹]

now is the time to convert (if your in canada) your canadian dollars into US dollars, i predict the canadian dollar dropping to normal aka 90 cents US in the VERY NEAR future. ;)

Which means that USD has to climb up 17%...that's a lot and the trend is going the other way around seeing how oil and gold continue to appreciate.

[+Mirumir Subscriber¹]

This article is written with style :)

Why we are paying more for our cars?

Matching U.S. prices would raise other issues

David Booth, National Post

Published: Friday, October 26, 2007

Boy, I'm probably coming out on the wrong side of this argument.

What was the most contentious topic of discussion to plague Ontario in the summer of 2007? Was it John Tory's ill-advised promise of faith-based schoolfunding? Thenever-ending angst over Canada's mission (impossible) in Afghanistan? Or was it the seemingly scripted, almost inevitable and always farcical decline of Britney Spears into the iPod generation's Mommie Dearest?

Nope. What has Canada's most uptight province's shorts in a fully Kenneth Starr (did you ever see anyone more desperately in need of Monica Lewinsky's, uhm, attentions than Bill Clinton's self-appointed conscience?) knot is the massive difference in price between the cost of a car in Niagara Falls, Ont., and one in Buffalo, N.Y.

Indeed, the difference is startling, especially if you're shopping a sports car with a serious price tag. A Corvette Z06, for instance, costs but $71,000 in the United States, but it will fetch upward of $91,685 in Canada. A Nissan 350Z, meanwhile, starts at $27,900 south of the border while retailing for a whopping $49,798 here. Yes, there are significant equipment differences between our cars, but hardly $20,000 worth.

All this used to make sense until the dollar that God trusted began its implosion. With our loonie now standing above the U.S. dollar and threatening to stomp Uncle Sam like it's 1812 all over again, the price of automobiles south of the 49th is creating a serious issue for Canadian consumers. Those not heading down to the United States of Cheap Cars are demanding that Canadian automotive distributors adjust their prices pronto. And who can argue with them, right?

Well, as it turns out, I can. And though my argument may be a little weak in the here and now, it should, at least, be food for thought.

For instance, are all our memories so short that we've already forgotten our 63? dollar? Eight years ago, Canadian cars were so cheap they were flooding across the U.S. border. Jeep dealers had lists of banned auto brokers who were consigning Canadian-purchased Grand Cherokees to the United States. And the number of big-sticker Toyota Previas heading south was positively staggering. Forgive me if I'm wrong here, but I don't remember one single, solitary Canadian consumer complaining that we were paying TOO LITTLE for our vehicles and asking manufacturers, "Could you please, please charge us more so it better reflects the Canadian/ U.S. exchange rate?"

Matching U.S. pricing will also cause as many headaches as it solves. What of all the recently purchased automobiles? A sudden drop in new car pricing will cause a serious nose-dive in residual values. Leasing companies would take a huge hit. One of their only solutions to recoup their money would be to raise interest rates on new leases, thereby negating some of the price savings. Owners of relatively new cars would be furious come trade-in time. The anticipated $40,000 they counted on getting for their used Mercedes E-Class would suddenly be $10,000 shy.

Besides, not every car imported into Canada was paid for in U.S. greenbacks. In most cases, cars within the same family have different origins that have had little effect from the greenback's devaluation. So, yes, a BMW X5 built in Spartanburg, N.C., should be cheaper, but then the price of a 335i built in Munich would hardly be affected, creating some imbalances within model lineups.

More importantly, how many of us are willing to live with Canadian pricing inexorably tied to the U.S./Canadian exchange rate? As every economist knows but home owners have seemingly forgotten, what goes up also has a nasty habit of coming down. Do you really think the Canadian dollar's appreciation is permanent? And what if Canadian distributors were to tie pricing to the U.S. dollar? Will you be willing to pay $47,000 for a Cadillac CTS one year and $56,000 the next because OPEC opened its faucets and the price of oil declined, sending the Canadian dollar tumbling?

I thought not.

I'm not saying the manufacturers don't need to reprice their Canadian products. They'd better do something soon before there's blood spilled in local dealerships. In fact, considering how incredibly unbalanced the price disparities have become and the incredible public outrage at Canadian prices, automakers deserve to have their pee-pees whacked for not having anticipated this problem and started the adjustments three or four years ago. But this carping for immediate price parity with the U.S. is in nobody's interest unless you really get off on having automobile price volatility that would make the Vancouver penny exchange look stable.

dbooth@nationalpost.com

Source

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CURRENCY: Setting course for $1.10

Dollar's climb sparks fears of economic disconnect

Stellar job numbers drive loonie past $1.07 as Canada's link with U.S. begins to erode

TARA PERKINS

With a report from Tavia Grant; Barrie McKenna

November 3, 2007

The rocket-propelled Canadian dollar flew past $1.07 (U.S.) yesterday, fuelled by strong economic data that have many forecasters wondering whether the economy is decoupling from its troubled southern neighbour.

Canada churned out five times more jobs than expected last month, a stellar showing that sparked a number of forecasts that the loonie is on its way to $1.10, as the greenback continues to dive.

While that's good news for Canadians who are planning to travel to the United States this holiday season, it will likely mean more pain for manufacturers, exporters and the tourist industry on this side of the border.

A speedy rise in the currency's value is concerning because of its effect on business, which has trouble planning in a volatile environment, Finance Minister Jim Flaherty said yesterday. There is mounting pressure on the Bank of Canada to reduce interest rates in order to cool the situation, but he suggested that's not the solution.

"It would be a mistake for anyone to think there is a quick fix to this, that were the Bank of Canada to do something that all of a sudden there would be a dramatic change in the value of the Canadian dollar," Mr. Flaherty told reporters after a speech in Toronto.

Royal Bank of Canada, the biggest international trader of Canadian dollars, raised its forecast yesterday, saying it expects the loonie to hit $1.08 before falling back below parity in the second half of next year.

"We had thought that if the U.S. economy slowed down, the global economy would probably slow down, and that doesn't seem to be panning out as much as people thought," said David Watt, senior currency strategist at RBC Capital Markets.

"If the currency is, to an extent, decoupling from the U.S., then it makes sense to come out with a Canadian dollar forecast which pays less relevance to the U.S. economy."

Mr. Flaherty said that decoupling is a strong word, but there has been an increase in the differences between the Canadian and U.S. economies.

Both countries had surprisingly strong employment numbers yesterday, throwing many market players for a loop, with economists at TD Securities coining the term "Jobtoberfest."

But, while the U.S. created twice as many jobs as economists had forecast for the month of October, the Canadian economy churned out 63,000 jobs, roughly five times the number that had been expected. The jobless rate in Canada fell to a 33-year low of 5.8 per cent, from 5.9 per cent in September, and the employment rate for adult women hit record levels.

Continue reading...

hmm... :)

Drug-busting loonie?

The loonie's muscle just may have done what U.S. government and law enforcement officials could not.

The strong dollar has "virtually stopped all exports to the United States of cannabis," said Marc Emery, the leader of the B.C. Marijuana Party of Canada.

Edited November 5, 2007 by Zhivago

[mad_onion]

yeah, i think people just think of the canadian dollar being worth less than the american dollar. but i guess that might not be the case in future at least for a while.

on www.xe.com there is a little question mark next to the value of the us dollar in canadian to explain it. i guess people were getting confused.

[Boffa Jones Veteran]

It is good to see, but I wish it had more to do with what we are doing well rather than what is going wrong with the USA.

[+Mirumir Subscriber¹]

It is good to see, but I wish it had more to do with what we are doing well rather than what is going wrong with the USA.

Yeah, but it's exactly the case. U.S. economy has contibuted, but the fact is that Canadian economy is booming. I was amazed by the job data - five times more jobs created than it had been anticipated! That's huge.

From another article I've read:

"Canada still looks like a great place and if you had to pick a spot where there's been almost nothing but good news, it sort of seems like Canada is the place at the moment".

<3 Canada :$

[Boffa Jones Veteran]

Yeah, but it's exactly the case. U.S. economy has contibuted, but the fact is that Canadian economy is booming. I was amazed by the job data - five times more jobs created than it had been anticipated! That's huge.

From another article I've read:

"Canada still looks like a great place and if you had to pick a spot where there's been almost nothing but good news, it sort of seems like Canada is the place at the moment".

<3 Canada :$

Great article thanks. Yeah Canada is swell :D.

BTW are you from Russia or Canada originally?

[ChopSuey]

now is the time to convert (if your in canada) your canadian dollars into US dollars, i predict the canadian dollar dropping to normal aka 90 cents US in the VERY NEAR future. ;)

I hate to burst your bubble, but the US dollar is going to remain lower than the Canadian dollar for a VERY long time. With a US election coming up in a year, the potential Iran conflict, price of oil, the housing markets, the unemployment rates, and the volitile stock markets, it would take a miracle for the US to rebound to where the US dollar was over a year ago.

[+Mirumir Subscriber¹]

/off topic

Great article thanks. Yeah Canada is swell :D.

BTW are you from Russia or Canada originally?

Russian-Canadian-Neowinian here :rolleyes: ...born in Russia :)

[ChopSuey]

UPDATE: Canadian dollar is almost at 1.09 US as of 6:25 PM EST on Nov 6th. The Canadian dollar just keeps climbing and climbing. Time for another cross border shopping trip. :) It may hit $1.10 by the end of the week, especially if oil keeps going up.

[Joni_78]

1 ? was 1,46 $ yesterday. USD has lost almost 50% of it's value in couple of past years.

[+Mirumir Subscriber¹]

Bush: We gotta fund the war, guys!

Congress: OK.

F.E.D.: Let's print more money!

True story. :pacifier:

[Fred Derf Veteran]

Now that China is talking about diversifying its foreign reserves away from the US dollar, I do not see the US dollar making a big comeback anytime soon. People keep saying that the Canadian dollar is overvalued but then it rises again. It went over US$1.10 in overnight trading.

[dacris2000]

I think the Canadian economy is due for a correction, either in the stock market or in the value of the dollar, depending on how the Bank of Canada reacts. Just look at how many manufacturing jobs have been lost recently.

I say, take advantage of the Canadian dollar while it's strong!

[Fred Derf Veteran]

Dollar has peaked, analysts say

JOHN PARTRIDGE AND HEATHER SCOFFIELD

Globe and Mail Update

November 13, 2007 at 9:43 PM EST

A growing chorus of currency specialists figures the Canadian dollar has flown as close to the sun as it is going to get after soaring to a modern record of $1.10 (U.S.) last week and may be heading back down toward parity with its U.S. counterpart or below.

U.S. investment bank Goldman Sachs lent its voice to the group Tuesday, saying that it is looking for more opportunities to bet against the currency, while CIBC World Markets said it figures the end of the loonie's ascent is near.

Even as the Canadian dollar clawed back a little of the altitude it lost Monday in its sharpest one-day drop in 26 years, Goldman Sachs currency strategist Jens Nordvig said he thinks it ?could well? slip back below parity with the greenback by the end of this year.

?Our bottom line is that we think the CAD [Canadian dollar] can correct further,? Mr. Nordvig said in a report to clients on Tuesday.

He also said that Goldman Sachs made a profit shorting the loonie against the Japanese yen last Friday, adding: ?We are looking for fresh opportunities to short the CAD? against other currencies.

The loonie closed at $1.0426 Tuesday, up 1.04 cents having climbed as far as $1.049 earlier in the day. This followed a plunge of 2.66 cents to $1.0322 on Monday.

Mr. Nordvig said that the Canadian dollar's ?massive, multiyear rally? has been ?outsized? even compared with other commodity-based currencies.

He cited plenty of reasons why he thinks the loonie's wings will be clipped.

Goldman Sachs' commodities research group, for instance, is no longer projecting additional price gains, the wave of foreign takeovers of Canadian companies that has fuelled demand for Canadian dollars is ebbing, and Canadian policy makers such as federal Finance Minister Jim Flaherty and Bank of Canada Governor David Dodge have expressed ?clear concern? about the loonie's strength in recent weeks, Mr. Nordvig argued.

While the currency may have peaked, it is still too high for the liking of the federal government, a top official from the Department of Finance said Tuesday.

He reiterated Mr. Flaherty's complaints that Canada has borne more than its fair share of U.S.-dollar depreciation. So far, though, the only thing Ottawa has done to fix things is talk about China needing to shoulder more of the depreciation by allowing its currency to float freely.

China has repeatedly rebuffed such calls from Canada, the European Union and the United States, and there is no indication that it has had a change of heart.

Still, Mr. Flaherty and Mr. Dodge will deliver their message to Chinese officials again this weekend, during a meeting of the Group of 20 finance ministers and central bankers in South Africa. Mr. Flaherty will also be holding bilateral meetings with his counterparts from the United States, the United Kingdom and Mexico, but does not have any such meeting planned with China.

David Powell, a currency analyst at Ideaglobal in New York, said the Goldman Sachs report has underlined a view that has been floating around the foreign exchange market for a while now and to which he subscribes: The Canadian dollar is overvalued.

?We think it's about 10 per cent overvalued,? he said in a telephone interview.

In Toronto, CIBC World Markets economist Avery Shenfeld echoed those sentiments.

?The [Canadian dollar] seemed to run out of gas last week, even as other majors (which had trailed the loonie) pressed on to stronger levels against the greenback,? he said in a weekly foreign exchange outlook commentary.

?While we could see one more test at a record, the market's second thoughts are consistent with our view that we're near the end of the loonie ascent.?

Mr. Shenfeld is now forecasting that the Canadian dollar will settle back to between $1 and $1.05, ?still strong but not unreasonably so.?

As for the loonie's climb Tuesday, currency specialists pointed to weakness in both the yen and the U.S. dollar.

?We're seeing the U.S. dollar very much down, so all the commodity currencies ? Canada, Australia and New Zealand, are all performing very well,? said Camilla Sutton, a Toronto-based currency strategist for Scotia Capital.

http://www.reportonbusiness.com/servlet/st...y/Business/home

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David Powell, a currency analyst at Ideaglobal in New York, said the Goldman Sachs report has underlined a view that has been floating around the foreign exchange market for a while now and to which he subscribes: The Canadian dollar is overvalued.

?We think it's about 10 per cent overvalued,? he said in a telephone interview.

...

Mr. Shenfeld is now forecasting that the Canadian dollar will settle back to between $1 and $1.05, ?still strong but not unreasonably so.?

Yeah, I agree.

1CAD=1.10USD is definitely overvalued at this time. However, in a few months down the road, that can be a norm. The major reason is that The Fed will print 800 billion more USD dollars in the next 2 years.