Loonie Plunges below 2005 levels

[Incinerator]

0.79846 USD as of right now...thoughts on the decline? Can the USD keep up like this after Nov 4??

Let's hear it from you guys...discuss.

[ok, ok,....I get it]

sh*t looks like my trip to Pheonix in the Feb to golf and see the Flames is going to cost.......

[worth]

Wow, it's amazing how fast it's gone down. over the summer we were nearly par.

[peter12]

Yikes, I have a trip planned to Seattle Nov. 21-25. Hope it doesn't go down much more.

[Tron_fdc]

Okay, so WTF is going on? The US dollar is STRENGTHENING against pretty much every currency on the planet, when their government has brought them (arguably) closer to a depression than at any point since the 30's.

Can someone explain that to me? Shouldn't the US dollar WEAKEN right now?

[Mccree]

Doesn't gold normally go up when the Markets go down? If so why is Gold down 22.00 today? I thnk the markets are just crazy now and NOTHING makes sense!!

[Nancy]

Oil is on a big decline today. The interest rate cut doesn't help either.

[Patrick]

Originally Posted by Tron_fdc

Okay, so WTF is going on? The US dollar is STRENGTHENING against pretty much every currency on the planet, when their government has brought them (arguably) closer to a depression than at any point since the 30's.

Can someone explain that to me? Shouldn't the US dollar WEAKEN right now?

CAN dollar is based on resources (commodities). If the face of global recession, commodities are nose diving...so does our dollar.

[Ronald Pagan]

When the Bank of Canada cut the interest rate the money supply increased because of more money being lent out due to cheap lending rates. A bigger supply of money means that it is less valuable because it's easier to get your hands on.

To explain the devaluations over the past 2 months or so, the energy sector has been hard hit and is one of Canada's main exports and sectors for foreign direct investment. When we export a good with less value on the global market, international buyers have to buy less Canadian dollars to buy our goods which drives down the demand for Canadian money. Equivalently, lower oil prices lower FDI inflows for projects in the oil sands. Less FDI means that less Canadian money needs to be exchanged for some other money lowering demand.

So there you go, in a nutshell why the Canadian dollar has devalued.

As per why the American dollar is strengthening, that's a more interesting question. And I don't have the answer off the top of my head.

[tvp2003]

I won't even try to figure out this nonsense... all I know is that my trip to the States next week is becoming more expensive by the day

[peter12]

Could this blip in the USD be the result of international hedging in the case of a mass US economic depression?

[Bobblehead]

Originally Posted by Tron_fdc

Okay, so WTF is going on? The US dollar is STRENGTHENING against pretty much every currency on the planet, when their government has brought them (arguably) closer to a depression than at any point since the 30's.

Can someone explain that to me? Shouldn't the US dollar WEAKEN right now?

US investors are hurting and selling their international holdings in order to shore up things at home.

Simply put, US companies can't borrow the money they need anymore, but they need to get that money from somewhere. So they are selling their holdings, both nationally and internationally. When they sell their international holdings, they then buy US dollars. That increases demand for the US dollar, increasing its value.

[peter12]

Originally Posted by Bobblehead

US investors are hurting and selling their international holdings in order to shore up things at home.

Simply put, US companies can't borrow the money they need anymore, but they need to get that money from somewhere. So they are selling their holdings, both nationally and internationally. When they sell their international holdings, they then buy US dollars. That increases demand for the US dollar, increasing its value.

So... is this temporary? Will it lead to a crash in the USD before November 20?

[Ronald Pagan]

Originally Posted by peter12

So... is this temporary? Will it lead to a crash in the USD before November 20?

If I could answer that I wouldn't be some schmoe on the interweb.

[Bobblehead]

Originally Posted by peter12

So... is this temporary? Will it lead to a crash in the USD before November 20?

Temporary? Well, that all depends upon the timespan you are looking at. If I had to guess, I would say no chance there is a drastic shift back the other way.

Just think of all the things happening even from the Canuck point of view. US investments in Canada made a few weeks ago have lost a lot of money. Will that cause investors to be scared similar to a bear stock market, or are Canadian labour and materials now a bargain to Americans? Now add these questions to almost every other country.

The old belief was that when a country adopted a "Beggar-thy-neighbour" policy (the act of devaluing your own currency to make your goods appear cheaper was teh classic example I was taught(wiki link)) it would take 2 years to realize the full impact of these types of policies.

However, with the speed of international banking and the amount of information that is almost immediately available, I'm sure adjustments occur much quicker.

I'd imagine there are going to be more ripples or echos from this credit shock, and economists are good at figuring out why stuff happened, but what is going to happen all depends in a large part upon the human responses, so until people always react predictably, there will always be uncertainty.

[GGG]

Really our dollar should be priced in Barrels of Oil rather than US dollars. As the price of Oil drops the value of our exports go down.

As far as Alberta Industry goes the crashing dollar is offsetting the dropping price of oil in US dollars.

[malcolmk14]

Good for Alberta oil when the dollar drops. They sell their oil in USD and pay their employees in CDN.

[stang]

[pepper24]

Originally Posted by malcolmk14

Good for Alberta oil when the dollar drops. They sell their oil in USD and pay their employees in CDN.

Opposite effect for the Flames and all Canadian NHL teams.

Though technically all the Flames owners are tied in with oil so they gain with their oil companies and lose out with the Flames.

[malcolmk14]

I'm curious. Anyone have any math regarding how much a 10 cent change in the dollar affects the Flames in terms of net profit?