Canadian Dollar

[Stranger]

Anyone have any thoughts on what the dollar might do in the next few months. I was just wondering if now is the time to buy some American money for a winter vacation this Christmas.

[Traditional_Ale]

If you really want to make some money for xmas, buy lithium stocks.

[bluejays]

Originally Posted by Stranger

Anyone have any thoughts on what the dollar might do in the next few months. I was just wondering if now is the time to buy some American money for a winter vacation this Christmas.

I'm not a economist, so I don't know the answer to be honest (neither do any economists IMO), but I'll chime in anyway. Whether or not the Canadian dollar is getting better or not, the downside risk of the dollar dropping IMO is too much to pass up. It seems like the summer is when commodities peak and the Canadian dollar goes up with it. I work for a Canadian bank and as employees we get the average price between the buy and sell. Today for every hundred USD I'd pay $107.625 CDN. I'm in the same situation with you as I'm going on vacation for Christmas this year too and I'm just going to tank up real soon. Make sure you find a buddy who works for a Canadian financial institution and you'll get a much better rate. As a matter of fact, I'm really thinking of loading up with about half of my savings into the USD just to wait until the New Year to unload as an investment.

[Sidney Crosby's Hat]

Originally Posted by fleury

I'm not a economist, so I don't know the answer to be honest (neither do any economists IMO), but I'll chime in anyway. Whether or not the Canadian dollar is getting better or not, the downside risk of the dollar dropping IMO is too much to pass up. It seems like the summer is when commodities peak and the Canadian dollar goes up with it. I work for a Canadian bank and as employees we get the average price between the buy and sell. Today for every hundred USD I'd pay $107.625 CDN. I'm in the same situation with you as I'm going on vacation for Christmas this year too and I'm just going to tank up real soon. Make sure you find a buddy who works for a Canadian financial institution and you'll get a much better rate. As a matter of fact, I'm really thinking of loading up with about half of my savings into the USD just to wait until the New Year to unload as an investment.

Another way to look at it is the Canadian Dollar is almost 93 cents right now. As you said, with the summer coming to a close it's probably not likely to go up another 7 cents to par before the end of the year. But there's decent odds that it could go back to 80 cents (which would be a 13 cent drop) or worse. Don't forget, it was just over 75 cents only four months ago.

Hedging your bets, I'd say buy now. Bringing it back to hockey, if you were the Calgary Flames would you hedge now? Canadian teams have been reluctant to do so in the past but that could be a big money maker if they do it at the right time.

[Charcot]

Herald Article


For what it is worth there was an article in todays Herald predicting parity with the US dollar within a year.

Charcot

[The Fonz]

Hypothetically speaking, lets say I took $2000 and bought US at 93 cents.

2000 x .93 = 1860 USD

Then sold at 80 cents...

1860/.80 = 2325 CAD



That seems like an easy way to make $325, what am I missing? What sort of exchange fees would I have to pay?

[Hack&Lube]

Originally Posted by The Fonz

Hypothetically speaking, lets say I took $2000 and bought US at 93 cents.

2000 x .93 = 1860 USD

Then sold at 80 cents...

1860/.80 = 2325 CAD



That seems like an easy way to make $325, what am I missing? What sort of exchange fees would I have to pay?

Very little depending on your bank. That's essentially how forex works. What you are missing is you are betting the dollar will drop to 80 and that's like betting on everything else on the stock market without doing your homework. It may or may not happen and if it does it might take a long time where your money would have been better invested or put to work elsewhere. I own a stock that was selling for $7 half a year ago. It's now selling for $14. If I had dropped all my life savings into it then, I could have doubled it...or I could have wiped myself out since that was the height of the recession and it might have gone even further down.

[Freeway]

Logically speaking, though, one of the largest determinants of the dollar's value is the value of crude oil. Generally, oil goes up and the dollar goes up with it.

So...is crude going to be higher than $74 by Christmas?

I'm not sure. I'm leaning towards yes.

[smith12]

Well I would take a different view of things. I don't see the dollar going below 1.10 unless the economy suddenly drops again which very few people see happening. If the economy tanks again then the demand for the greenback will rise, thus increasing it's value.

Should the economy continue to slowly come out of this recession as it is right now, then the US dollar is going to fall vs the CDN. Why? Well there's a number of reasons, but the top 2 being:

1 - The US has printed more money than Canada during this recession. I don't think you need to be an economist to know what the impact that additional supply of money has on the supply/demand for their dollar and what it does to the value.

2 - The price of commodities (not just oil) should continue to go up and if this happens, the CDN will rise as well since the price of commodies has a massive impact on Canada's resouce based economy.

If anything, I see Canada getting close to par by the end of the year should the world economies continue to slowly come come out of this global recession.

[Sainters7]

Great timing that I'm in Phoenix in two days. After I get back home, I think I may wait awhile before I convert back to Canadian..

[Canada 02]

Bank of Canada Deputy Governor Timothy Lane said “persistent strength” in the loonie could derail the country's recovery from recession and signalled the central bank is prepared to weaken the currency if necessary.

http://www.theglobeandmail.com/repor...rticle1263906/

[Slava]

Originally Posted by smith12

Well I would take a different view of things. I don't see the dollar going below 1.10 unless the economy suddenly drops again which very few people see happening. If the economy tanks again then the demand for the greenback will rise, thus increasing it's value.

Should the economy continue to slowly come out of this recession as it is right now, then the US dollar is going to fall vs the CDN. Why? Well there's a number of reasons, but the top 2 being:

1 - The US has printed more money than Canada during this recession. I don't think you need to be an economist to know what the impact that additional supply of money has on the supply/demand for their dollar and what it does to the value.

2 - The price of commodities (not just oil) should continue to go up and if this happens, the CDN will rise as well since the price of commodies has a massive impact on Canada's resouce based economy.

If anything, I see Canada getting close to par by the end of the year should the world economies continue to slowly come come out of this global recession.

Interesting. I was going to dig out the financial turmoil thread just to comment on this today. Based purely on anecdotal information that I've heard from many economists and analysts I have the opposite impression.

Basically most people suggest that we've come too far, too fast and its not sustainable (speaking more about the stock market here, but certainly this is an economic reality as well). I don't want to derail the thread here, so I'll stop at that, but certainly that seems to be the pervasive attitude I've seen out there.

As far as making a short-term bet on the dollar its just that...a bet. You are gambling that over the next six months the dollar is going to move in a certain direction. I would consider that if you A) had the cash to lose and B) were maybe sitting at/near and all time high or low, but we're really in the middle here.

[Tron_fdc]

Originally Posted by Slava

Basically most people suggest that we've come too far, too fast and its not sustainable (speaking more about the stock market here, but certainly this is an economic reality as well). I don't want to derail the thread here, so I'll stop at that, but certainly that seems to be the pervasive attitude I've seen out there.

So you're thinking there might be another drop?

That's the impression I'm getting as well......

[Sylvanfan]

Roubini cautioned against this the other day too.

http://canadafreepress.com/index.php/article/14042

[Cowperson]

Originally Posted by Slava

Basically most people suggest that we've come too far, too fast and its not sustainable (speaking more about the stock market here, but certainly this is an economic reality as well). I don't want to derail the thread here, so I'll stop at that, but certainly that seems to be the pervasive attitude I've seen out there.

.

Statistically, September is the only month of the year with a long-term, negative rate of return.

In other words, if doo-doo is going to happen, it's going to happen in September.

Add that onto an astronomical rise since March and it seems the Gods are lining something up . . . . . .

However, if everyone is thinking that, there's a good chance the opposite is going to happen.

There's a ton of cash out there earning one half of one percent that's starting to squirm . . . . . and that will mean something too.

Cowperson

[return to the red]

Originally Posted by Slava

Interesting. I was going to dig out the financial turmoil thread just to comment on this today. Based purely on anecdotal information that I've heard from many economists and analysts I have the opposite impression.

Basically most people suggest that we've come too far, too fast and its not sustainable (speaking more about the stock market here, but certainly this is an economic reality as well). I don't want to derail the thread here, so I'll stop at that, but certainly that seems to be the pervasive attitude I've seen out there.

As far as making a short-term bet on the dollar its just that...a bet. You are gambling that over the next six months the dollar is going to move in a certain direction. I would consider that if you A) had the cash to lose and B) were maybe sitting at/near and all time high or low, but we're really in the middle here.

I was told that this claim of economic recovery is far from true. Yes the markets are trading higher but the volumes just aren't there, it has many investors puzzled and reluctant at the same time.

In terms of the dollar it really depends what happens on the global market and there are many factors that could swing the value both ways.

[moncton golden flames]

Originally Posted by Slava

Basically most people suggest that we've come too far, too fast and its not sustainable (speaking more about the stock market here, but certainly this is an economic reality as well).

we're in the middle of a fool's rally, hence i haven't contacted you for investment purposes. i invested the minimum into rrsp's and am holding cash and precious metals.

[MaDMaN_26]

Originally Posted by Canada 02

http://www.theglobeandmail.com/report-on-business/strong-loonie-could-derail-recovery-central-bank-says/article1263906/

So to weaken the dollar as this article suggests… how would that be done? Raising interest rates?

[Slava]

Originally Posted by Cowperson

Statistically, September is the only month of the year with a long-term, negative rate of return.

In other words, if doo-doo is going to happen, it's going to happen in September.

Add that onto an astronomical rise since March and it seems the Gods are lining something up . . . . . .

However, if everyone is thinking that, there's a good chance the opposite is going to happen.

There's a ton of cash out there earning one half of one percent that's starting to squirm . . . . . and that will mean something too.

Cowperson

Of course trying to predict this is almost impossible, for much of what you outline here. With a huge amount of cash sitting on the sidelines its unlikely that a major drop will get rolling because people should start buying and keep the markets from free fall...but then again they might all wait and see how low it goes first!

September has a net negative, and depending on how you look at the statistics so does February. June is barely positive. If you know what you're doing though and have a disciplined process to begin with the time of year makes no real difference.

[Slava]

Originally Posted by MaDMaN_26

So to weaken the dollar as this article suggests… how would that be done? Raising interest rates?

I doubt that the central banks would look to raise rates at this point...its risky for sure. The whole mess is a credit crisis and increasing the cost of credit on the way out (which most people agree on, we are on the way out somewhere on the scale) could kill that growth.