Loonie Plunges below 2005 levels

[ken0042]

Originally Posted by peter12

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

Yeah, I have a trip planned for the same week. When I saw it costing over $1.10 to buy I decided to wait.

Today I am buying a bunch of US cash. At least we are partially insulated; the sporting event tickets were bought months ago with near par dollars.

[peter12]

Originally Posted by ken0042

Yeah, I have a trip planned for the same week. When I saw it costing over $1.10 to buy I decided to wait.

Today I am buying a bunch of US cash. At least we are partially insulated; the sporting event tickets were bought months ago with near par dollars.

Yeah, I paid accomodation and tickets for the concerts I am attending back when the dollars were near par. I think I might go ahead and get a bunch of USD tonight, in case things get worse.

[GGG]

Originally Posted by 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?

It really depends on how much they hedge. Since a significant amount of the flames money comes in at the start of the season in Season ticket sales they could have converted that money at almost par to cover Salaries.

Their payroll is 56million so the difference between 90 cent dollar and an 80 cent dollar is about 8 million

[Flames89]

US$ is going up, also because the rest of the world's prospects look even worse. All currencies are dropping against the US$ because it is seen as the most resiliant (it really helps when all commodities are based in your dollar). Once all the global players realized they were in NO way decoupled from the US - they let out a collective "oh $h!t", and have tanked as well.

Our recent quick drop, as mentioned above, is b/c of the recent Canadian Fed lowering of interest rates - raising the worry amongst market players that the spread between our rates and the US will grow - which is valid if you prescribe by the generality that Canada lags the US.

US got us in this mess, and they can get us out - on the backs of the emerging countries like China.


... and as for Gold. As US$ rises, gold will fall - as the US$ provides a better investment option. As commodities rise, gold should also rise as a hedge against inflation. This is why we saw a blip upwards in gold when oil also blipped. But regardless, yes, everything is f-ed.

[MoneyGuy]

I have done some economics study (some as part of the CFP program) and this is my take on the loonie's drop lately. Despite the woes in the States, investors are shunning energy and commodities as being risky (which affects the loonie), and taking refuge in the one currency that is seen as a safe haven - the greenback (sending it's price up). There may be more to it than that, but I think that is a big part of the answer. There may be an economist here who can provide a more full answer.

Gee, am I ever glad I opened a U.S.-dollar high-interest savings account and deposited about $15k when the loonie was trading above par with the greenback.

[Ronald Pagan]

When in doubt ask The Economist

The dollar’s recovery is a little harder to fathom. After all, the origins of the credit crunch lie in America’s housing bust, which has resulted in huge losses for banks worldwide on securities backed by souring American mortgages. The crisis intensified because of the failure of an American bank, Lehman Brothers. And America itself relies on the kindness of strangers to keep its show on the road: it ran a current-account deficit of 5% of GDP in the second quarter. These reasons not to like the dollar are trumped by its enduring appeal as the world’s reserve currency. Jittery investors want to be able to turn their assets to cash quickly and America’s bond markets are the most liquid in the world. It is likely that the dollar has also benefited from a repatriation of funds by investors at home. Before its recent rally, the dollar (like the yen) looked cheap on conventional benchmarks, such as purchasing-power parity: at least some bad news had already been priced into America’s currency. The sell-off in sterling and the sharp drop on European and Asian stockmarkets suggests that the troubles of rest of the world are only just beginning.

http://www.economist.com/finance/dis...tures_box_main

[Bobblehead]

I just read this article last night:
http://www.economist.com/displaystor...ry_id=12415730

It gives a step by step of how this all developed. I wouldn't say anyone can understand it, but it it probably as simplified as it is going to get without losing critical details or becoming 5 times longer.

[llama64]

I find this interesting. Canada's dollar drop is a simple result of the downturn in the commodities market (Oil primarilly).

The downturn is being caused by everyone around the world canceling or postponing their large projects due to the hesitation in the US market (thanks to the credit debacle). Basically the demand for Canadian resources had dropped, taking our dollar with it.

Fair enough.

Thing is, once the US election is decided(either way really), all these companies/organizations that have stopped development for now will have a better sense of where things are going and will return to their developments. The demand for resources will return and the Canadian dollar will jump back to where it should be.

By this time next year, we will be doing just fine. Unless I'm somehow missing the basics of the Canadian economy somewhere....

This just goes to show everyone just how stupid it is to base a first world nations economy on resources. Canada needs to start investing it's resource wealth into itself rather then continuing to fuel the development of other nations.

[V]

Originally Posted by Flames89

US$ is going up, also because the rest of the world's prospects look even worse.

Not all currencies. The JPY has absolutely crushed the USD. It's been amazing to watch, really.

As for why? Who knows. I just read the chart and figure out where things are going from there. It works well enough.

[Bobblehead]

Originally Posted by V

Not all currencies. The JPY has absolutely crushed the USD. It's been amazing to watch, really.

As for why? Who knows. I just read the chart and figure out where things are going from there. It works well enough.

During the Japanese banking crisis they cut their central rate down to 0. Even since, it has not risen up to match other countries.

So traders would borrow for low rates from Japan, and invest them in other countries with higher rates.

Now the people that did this see the countries where they invested dropping the rates like Japan did, and they start pulling out of those investments. So they sell those instruments and, in order to pay off the Japanese loans they buy up the Yen. This increases the supply of the foreign currencies and increases the demand for the Yen. The AUS $ is getting the crap kicked out of it right now.

And of course, as the Yen becomes more valuable, people who borrowed in Yen then converted to foreign currencies are now seeing those foreign investments dropping in value (relative to the Yen) and they are getting scared and "feeding the bear".

Generally, the way to offset this would be to raise interest rates to offset the decline in the value of the currency. But banks can't do that because the last thing they want is to shrink the credit market.

[ken0042]

Looks like the Canadian dollar is making some serious gains today.
http://www.tdcommercialbanking.com/t...ance/rates.jsp

[troutman]

[troutman]

[JD]

Originally Posted by ken0042

Looks like the Canadian dollar is making some serious gains today.
http://www.tdcommercialbanking.com/t...ance/rates.jsp

Well of course it is. I got back from Vegas last night.

[MoneyGuy]

Don't bet on currencies. You won't win.

[Nancy]

Oil spot is up almost 10% today. Amazing just how much the C$ depends on oil.

[Flames89]

White line is Canadian Dollar, Orange is Oil.

2004 - 2008.

[Nehkara]

Wow. Canadian Dollar gained about 6 cents to end the week... I hope that it holds this gain and stabilizes in and around 85 cents.

[the crispy badger]

going on a trip to NYC at the end of the year..pleaseeeeeeee stabilize!

[Bobblehead]

And .8696 today.
http://www.theglobeandmail.com/servl...Story/Business

The volatile Canadian dollar, lifted by rising commodity prices, surged more than two cents Tuesday to 86.96 cents (U.S.) – up more than 9 cents from a week ago.