Canadian dollar on a roll again

[mirror]

I heard on the news this morning that Canada's dollar once again is starting to climb towards par with the US dollar. It has been a long time since that occured and there are a lot of us who would consider traveling to the US again if that were to happen.

Anyway this is another strong encouraging sign that our Canadian economy is in great shape and we can look forward to a fabulous future.

[mirror]

Canada records another surplus despite our strong dollar so that augers well for a robust Canadian economy. It is obvious though that we seriously need to diversify our trading partners. It is never good to put all one's eggs in one basket.

Canada posts record trade surplus

[mirror]

Just found confirmation of what I heard on the radio this AM.

Go Canada Go!

Loonie keeps climbing

The Canadian dollar rose Friday to its highest level this year, propelled by a larger-than-expected trade surplus and oil prices that pushed to yet another record.

The loonie rose to 83.74 cents (U.S.), its highest level since Dec. 4, from Thursday's Bank of Canada close of 83.28 cents. In the past three months alone, the Canadian dollar has gained 6.3 per cent against its U.S. counterpart.

The price of oil is really beginning to take off as well, currently around $66. I remember many of the economic experts saying if the price of oil goes up it is going to destroy our economy. Hogwash! It has gone up and the economy is thrieving.

[Guest eureka]

The price of oil could well sink our economy: we could contract the Norwegian disease. Norwey was hurt badly by inflation and a too strong currency afetr North Sea oil.

A substantial rise in the dollar due to oil could damage our competitiveness in other exports and increase our imports thuse further damaging Canadian manufacturers.

Perhaps a reason to give the Alberta "Separitists" what they want and watch them drown in oil as they wave their worthless Albertan dollars.

[Mad_Michael]

As far as I understand economics and the historical record here, the Canadian dollar moves in direct proportion to the world commodity price index.

Previous high level in this index correspond to the later 1970's period, with a low point in the mid-80's. Both of these points correspond to the high and low point of the Canadian dollar.

At present, the world commodity price index is on a solid upward trend for the last couple of years. Thus, so is the Canadian dollar.

[Toro]

The loonie is going to hit $0.90 and maybe hit par. That probably is too strong, but I doubt it will lead to a recession. The trade-weighted value of the loonie is around $0.75-$0.80. It was when it hit $0.62 and it will be when it hit $0.95. A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

[Leader Circle]

The loonie is going to hit $0.90 and maybe hit par.  That probably is too strong, but I doubt it will lead to a recession.  The trade-weighted value of the loonie is around $0.75-$0.80.  It was when it hit $0.62 and it will be when it hit $0.95.  A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

<{POST_SNAPBACK}>

Doesn't a higher dollar usually lead to higher interest rates & inflation?

[Toro]

The loonie is going to hit $0.90 and maybe hit par.  That probably is too strong, but I doubt it will lead to a recession.  The trade-weighted value of the loonie is around $0.75-$0.80.  It was when it hit $0.62 and it will be when it hit $0.95.  A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

<{POST_SNAPBACK}>

Doesn't a higher dollar usually lead to higher interest rates & inflation?

<{POST_SNAPBACK}>

No, its the opposite. A higher dollar means imports are cheaper, which leads to lower inflation. It is also usually accompanied by capital flows of foreigners buying domestic bonds, which lowers the interest rate.

[mirror]

Recently I have been working on a project for Terasen Gas. I remember reading the press that some giant US pipeline company was going to buy Terasen. Why in the world would Canada allow a sale like this to proceed?

U.S. company buying Terasen Gas

A Texas company is buying Vancouver-based Terasen Inc., which used to be known as B.C. Gas. .

Houston-based Kinder Morgan is bidding $6.9 billion Cdn in cash, shares and debt relief for Terasen.

The board of directors of Terasen has approved the deal. And shares of Terasen Inc. shot up more than 17 per cent on Tuesday as a result of the bid.

[mirror]

Recently I have been working on a project for Terasen Gas. I also remember reading in the press that some giant US pipeline company was going to buy Terasen. Why in the world would Canada allow a sale like this to proceed?

U.S. company buying Terasen Gas

A Texas company is buying Vancouver-based Terasen Inc., which used to be known as B.C. Gas. .

Houston-based Kinder Morgan is bidding $6.9 billion Cdn in cash, shares and debt relief for Terasen.

The board of directors of Terasen has approved the deal. And shares of Terasen Inc. shot up more than 17 per cent on Tuesday as a result of the bid.

[Toro]

Because they are paying A LOT of money for this property. A LOT. I can't remember the terms of the deal, but it was something like 13-14x cash flow. The chatter in the investment community was that since Kinder was overpaying for the company, they must be convinced the price of energy is going to remain high.

[mirror]

Recently I have been working on a project for Terasen Gas. I also remember reading in the press that some giant US pipeline company was going to buy Terasen. Why in the world would Canada allow a sale like this to proceed?

U.S. company buying Terasen Gas

A Texas company is buying Vancouver-based Terasen Inc., which used to be known as B.C. Gas. .

Houston-based Kinder Morgan is bidding $6.9 billion Cdn in cash, shares and debt relief for Terasen.

The board of directors of Terasen has approved the deal. And shares of Terasen Inc. shot up more than 17 per cent on Tuesday as a result of the bid.

[August1991]

A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

I don't think you can say that, even with the qualification. It is unfortunate that too many see the foreign price of our currency as the measure of our worth, as if economics were some sports game.

If you are selling, you want a high price. If you are buying, you want a low price. It is best for all that it is the "right" price.

Doesn't a higher dollar usually lead to higher interest rates & inflation?

No, its the opposite. A higher dollar means imports are cheaper, which leads to lower inflation. It is also usually accompanied by capital flows of foreigners buying domestic bonds, which lowers the interest rate.

I wouldn't be so quick to say that either. It depends on why the currency is appreciating.

If the Canadian dollar is now rising because of rising commodity prices (eg. oil), then this will be reflected in inflation.

I think it's fair to say that this will have a negative impact on the economy of Central Canada and the Bank of Canada will be very, very cautious now in raising interest rates. (Another poster referred to this problem as the "Norwegian Disease".)

[Toro]

A strong currency is indicative of a strong economy BTW, or at least when there are structural reasons for the appreciation.

I don't think you can say that, even with the qualification. It is unfortunate that too many see the foreign price of our currency as the measure of our worth, as if economics were some sports game.

If you are selling, you want a high price. If you are buying, you want a low price. It is best for all that it is the "right" price.

Doesn't a higher dollar usually lead to higher interest rates & inflation?

No, its the opposite. A higher dollar means imports are cheaper, which leads to lower inflation. It is also usually accompanied by capital flows of foreigners buying domestic bonds, which lowers the interest rate.

I wouldn't be so quick to say that either. It depends on why the currency is appreciating.

If the Canadian dollar is now rising because of rising commodity prices (eg. oil), then this will be reflected in inflation.

I think it's fair to say that this will have a negative impact on the economy of Central Canada and the Bank of Canada will be very, very cautious now in raising interest rates. (Another poster referred to this problem as the "Norwegian Disease".)

<{POST_SNAPBACK}>

That certainly hasn't been the case so far though. The CRB has doubled over the past five or so years and inflation is no where to be seen. Also, in the US economy, energy is only about 4-5% of the economic input now, compared to about 20% 30 years ago, so it has less of an influence.

[mirror]

Norway is not some third world country. Norway has one of the highest standards of living in the world. As a matter of fact there is NO poverty in Norway. What other country including your beloved US can boast of something like that?

Canada's dollar is going higher and may well go to par, at least in the 90s. And this is going to be wonderful for the average Canadian which is what really matters. We will be able to purchase foreign goods more cheaply and travel abroad at less expense.

Go Canada Go!

[Toro]

Right. And Norway won't enter the EU because it doesn't to get poorer because it would have to share its oil wealth

[mirror]

Is the Canadian dollar about to take off again:

U.S. dollar weakens against Canadian dollar

The U.S. dollar weakened against the Canadian dollar early Tuesday morning, following some appreciation during overnight trading. By 11 a.m. the U.S. dollar was trading at 1.1990. The U.S. dollar has declined significantly against the Canadian dollar since May and is currently testing a support line, which has already twice this year prevented further deprecation. A report, released by the U.S. government on Tuesday, showed that U.S. consumer prices in July rose at their fastest pace in three months amid the persistent surge in oil prices. Oil reached a record $67 a barrel last week and pushed consumer prices higher by 0.5 percent in July. July's data complimented the view of the U.S. central bank that the world's largest economy is experiencing "elevated" inflationary pressure. While consumer prices rose more than analysts had forecast, core inflation, a less volatile measure, which excludes components such as food and energy prices, remained soft at 0.1 percent for a third consecutive month. Nonetheless the U.S. Federal Reserve Bank is expected to continue to raise interest rates until at least the end of 2005.

The British pound also lost ground against the Canadian dollar Tuesday morning and was trading at 2.1680 by 11 a.m. The pound bounced back from its lows reached mid-July but has retreated somewhat over the past week. Like the euro, the pound has experienced sharp depreciation against the Canadian dollar since May.

Go Canada Go!

[Riverwind]

Is the Canadian dollar about to take off again:

Go Canada Go!

A rising Canadian dollar is a bad thing for a large number of Canadians - particularily those who work in any sort of export industry.

[shoop]

A rising Canadian dollar is a bad thing for a large number of Canadians - particularily those who work in any sort of export industry.

<{POST_SNAPBACK}>

There is the difference between short-term and long-term thinking on the issue.

In the short-term a higher canadian dollar has a mixed impact on Canada. In the long-term it is overwhelmingly in the best interest of the country. Exporters are forced to be more competitive to sell abroad. Those who can't fail. Those who can compete gain larger market share back home and increased efficiencies that help ensure their long-term sustainability.

Plus the strengthening dollar helps with debt repayment.

Simply put a stronger Canadian dollar means our goods and services are more valuable. Tough to argue with that.

[mirror]

I was looking at the DJIA this morning. It is around 10,500.

It seems that it has done diddley squat for two years, as I seem to remember it being at 10,500 two years ago. What a waste! People must be losing their shirts in a market like this, n'est pas?

[Riverwind]

Exporters are forced to be more competitive to sell abroad. Those who can't fail. Those who can compete gain larger market share back home and increased efficiencies that help ensure their long-term sustainability.

The trouble with this logic is many exporters will improve efficiency by moving work to lower cost countries which does not help Canadians a bit unless they own stock in the companies in question. There are many examples of 'high' currency economies that stagnate - look at Japan. My concern is currency markets overshoot - many businesses that would be viable in the long term with a 80 cent dollar will go out of business with 90 cent dollar.

[mirror]

Let's rock & roll boys and girls, as here we go again:

Stronger oil prices and merger

news helped the Canadian dollar rise strongly against a broadly

weaker U.S. dollar on Monday, while domestic bond prices were

pressured by firm retail sales data.

The currency finished at C$1.2022 to the U.S. dollar, or

83.18 U.S. cents, up from C$1.2116 to the U.S. dollar, or 82.54

U.S. cents, at Friday's close.

"We saw a broad U.S. dollar selloff as the North American

session was getting under way," said David Powell, currency

analyst at IDEAglobal in New York. The greenback's weakness was

generally due to a stronger Japanese yen.

"But specifically for Canada, the big things were the M&A

developments that came out today, and oil fed into that in the

morning as it was up."

Oil topped $66 per barrel during the session -- with U.S.

crude for September delivery settling at $65.45, up 10 cents --

helping fuel interest in Canada's resource rich-economy. Two

merger bids also helped boost the loonie as they raised

expectations of large currency switch-overs in the future.

Chinese state oil company CNPC launched a $4.18 billion bid

for Canadian energy company PetroKazakhstan (PKZ.TO: Quote, Profile, Research), while

German tourism and shipping firm TUI (TUIGn.DE: Quote, Profile, Research) announced a $2

billion cash offer for Canadian company CP Ships Ltd. 

[Toro]

A rising Canadian dollar is a bad thing for a large number of Canadians - particularily those who work in any sort of export industry.

<{POST_SNAPBACK}>

There is the difference between short-term and long-term thinking on the issue.

In the short-term a higher canadian dollar has a mixed impact on Canada. In the long-term it is overwhelmingly in the best interest of the country. Exporters are forced to be more competitive to sell abroad. Those who can't fail. Those who can compete gain larger market share back home and increased efficiencies that help ensure their long-term sustainability.

Plus the strengthening dollar helps with debt repayment.

Simply put a stronger Canadian dollar means our goods and services are more valuable. Tough to argue with that.

<{POST_SNAPBACK}>

Agreed. It also improves the terms of trade globally for Canadians, which means Canadians are becoming relatively wealthier in the world. That's good for consumers. A long-term upward trend in the currency underpinned by fundamentals is a sign of strength, not weakness. A sign of economic weakness is when a currency continues to depreciate.

[err]

I think a strong dollar will be fairly damaging for the Canadian economy... at least the manufacturing sector. Way back, when the NAFTA agreement went into effect, our dollar was plummeting.... rapidly... And the Conservative were sure to tell us about the sudden and growing trade surplus with the USA.... which they attributed solely to NAFTA...

However, our lower dollar was incredible for Canadian business, not just exporters. Considerable chunks of our service sector, contract manufacturing, etc.. were flooded with American business due to the weak Canadian dollar.

Now let's see if the tide's going out with the higher dollar....

[cybercoma]

We're probably talking less about our dollar strengthening and more about the US dollar weakening. This is not good for our economy at all, for all the reasons that hopefully have been touched already in the last three pages.