Dollar continues to move upwards vs. US $

[arsenal]

I think it's almost time to invest is some american dollars...

[Dion]

Originally Posted by arsenal

I think it's almost time to invest is some american dollars...

I have done the same. Got a brother and sister who live south of the border and this will make my vacations there less expensive. Plus I tend to buy a lot of clothes when i'm down there.

[Sylvanfan]

Originally Posted by Flames_Gimp

I think it is a good thing to have a valuable dollar.

Not when the backbone of the countries economy is selling goods in a weaker currency. IMO hooray I can go to the U.S and spend $5 less on a shirt if I want. But the oil companies now can look to have all their steel designed, and built in the U.S and shipped to Canada and save a lot of money now. Or they might balk at the production costs that they now face in Canada and refuse to produce anymore oil.

What good is my purchasing power if I have no income with which to buy stuff? I've tried to look after my money, but I'm only 31 and don't have enough money saved to live out the rest of my life. I still need to draw an income and my earning ability is largely based on our core industries being willing to spend on expanding and upgrading their equipment. If they stop spending...well I have less money, and I have to stop spending, and eventually that trickles down, and it affects a lot of people beyond myself.

But if I was a retired Canadian who had 2 million in the bank or I had more than enough money to my name in assets that I could afford for our economy to crash and burn, I'd sing a different tune.

[Ironhorse]

Originally Posted by Sylvanfan

Or just increasing their prices in the U.S!

Yeah, most likely pushing for some type of even out tax on vehichles that are imported back into Canada from the U.S.

That's the only way it could likely work, because if they dropped the price on new Canadian vehicles it would instantly kill the used car market and residual values on existing lease contracts, as well has having a very angry mob of customers who instantly owe more on their cars than a new one costs. They would likely also take a bath on reselling any leasers they have coming back to them.

[Flames_Gimp]

Originally Posted by Sylvanfan

Not when the backbone of the countries economy is selling goods in a weaker currency. IMO hooray I can go to the U.S and spend $5 less on a shirt if I want. But the oil companies now can look to have all their steel designed, and built in the U.S and shipped to Canada and save a lot of money now. Or they might balk at the production costs that they now face in Canada and refuse to produce anymore oil.

What good is my purchasing power if I have no income with which to buy stuff? I've tried to look after my money, but I'm only 31 and don't have enough money saved to live out the rest of my life. I still need to draw an income and my earning ability is largely based on our core industries being willing to spend on expanding and upgrading their equipment. If they stop spending...well I have less money, and I have to stop spending, and eventually that trickles down, and it affects a lot of people beyond myself.

But if I was a retired Canadian who had 2 million in the bank or I had more than enough money to my name in assets that I could afford for our economy to crash and burn, I'd sing a different tune.

no way will it directly affect you..

[The Yen Man]

Originally Posted by Flames_Gimp

no way will it directly affect you..

Oh yah? How do you figure? Wouldn't companies moving production to the States and massive layoffs as a result of plants closing down in Canada affect the general population?

[Bobblehead]

I'm wondering if businesses just don't know how to handle this recent swing. It has jumped the last 10 cents in a relatively short time.

I also think this may burn them more than they expect because more people can comparison shop on line or order from the US. It isn't just what catalogue you receive anymore, this is the first time in the Internet Age that this type of a monetary swing has happened in North America, and the results are going to pan out much faster.

In MacroEconomics classes I took in the early 90s it was said that a change in the exchange rate would take approx. 2 years to filter through all the markets and retail chains. In this day and ag I would imagine it will take the amount of time for contracts and current inventory to run out. Any longer than that and people are going to purchase from one of the myriad of vendors online.

[jammies]

If the Canadian economy went into the tank, the dollar would lose value against the US dollar again. So there is an upper limit to how high the dollar can go (in the short term, anyway), and $2 CAD/1 US is just absurd, there'd be a massive depression here long before that could ever happen.

[psicodude]

Originally Posted by guzzy

Sadly most items in Canada will always be more expensive. We have terrible infrastructure and pay huge taxes on everything. The cost of doing business in Canada is quite larger than the US. The US interstates make moving products much cheaper than Canada's highways. Canada could learn something from the US when it comes to infrastucture.

I do agree that it would be nice to see some items even move closer to the US price. For example, my new Oakleys were $230 plus tax at Spare Parts. I went online at Oakley.com and the glasses were $155 US. On Oakley.ca they were $230 CDN. Needless to say, I bought them in Montana on my last visit. I do almost all of my clothes shopping down there because it is ridiculously cheaper for everything because they are not taxed to death down there.

I agree that freight costs are higher in Canada, but $20k higher? I don't think so. I think it has become quite apparent that Canadians have been fleeced by the auto industry for a long time now. They were just able to use the dollar as an excuse, until now.

The other question I have is....what will the Bank Of Canada do (if anything) to put a halt to this trend. I mean, at some point the strong dollar will really start to hurt the economy....right?

[jolinar of malkshor]

Originally Posted by psicodude

I agree that freight costs are higher in Canada, but $20k higher? I don't think so. I think it has become quite apparent that Canadians have been fleeced by the auto industry for a long time now. They were just able to use the dollar as an excuse, until now.

The other question I have is....what will the Bank Of Canada do (if anything) to put a halt to this trend. I mean, at some point the strong dollar will really start to hurt the economy....right?

It should slow the economy down inwhich the bank won't have to keep raising rates.

[Dion]

Originally Posted by psicodude

The other question I have is....what will the Bank Of Canada do (if anything) to put a halt to this trend. I mean, at some point the strong dollar will really start to hurt the economy....right?

My banker says there will be an interest rate cut on Monday.

[Wookie]

Originally Posted by Dion

My banker says there will be an interest rate cut on Monday.

Looking ahead to next week, the major event of the week will be the Bank of Canada's interest rate announcement on Tuesday.
While a Reuters poll on Thursday showed that Canada's primary security dealers unanimously forecast the central bank to leave rates steady at 4.5 percent next week, attention will be paid to the tone of the bank's statement as the market seeks clues on the direction of monetary policy. "Last time around the tone was quite dovish, at least it opened the door to rate cuts," said Carlos Leitao, chief economist at Laurentian Bank of Canada. "But I think this time around they're going to play it safe and become a bit more hawkish, signaling there will be rate hikes once the money markets return to some sort of normalcy."

http://ca.today.reuters.com/news/new...-BONDS-COL.XML

Are they announcing it on Monday or Tuesday?

I figured they'd stand pat for the rest of the year.

Eh, but who knows, I guess we'll see next week.

[Bobblehead]

They don't want to cut the rate because they are worried about inflation. It has been at the top end of their acceptable limits, and realistically they would like to raise rates a bit to keep inflation in check. But with the dollar soaring, they don't want to create additional upward pressure (which raising the interest rate would do).

It is a balancing act.

[mrdeeds]

Originally Posted by arsenal

I think it's almost time to invest is some american dollars...

I think a better option maybe Gold futures, with the weakness of the Yankee buck, a lot are turning gooold. From around $600/oz to $750 in less than a year is pretty attractive.

[Sample00]

Originally Posted by Bobblehead

They don't want to cut the rate because they are worried about inflation. It has been at the top end of their acceptable limits, and realistically they would like to raise rates a bit to keep inflation in check. But with the dollar soaring, they don't want to create additional upward pressure (which raising the interest rate would do).

It is a balancing act.

damn, I just love this stuff. shoulda been an Economics major!!!
its going to be interesting as to how the Central Bank handles this and I wonder how the Government will influence that decision. If these CAD keep leaving into the States for goods and services, you would think that the Government is going to find a way to reduce that a bit.

[Flames in 07]

Originally Posted by Sylvanfan

Not when the backbone of the countries economy is selling goods in a weaker currency. IMO hooray I can go to the U.S and spend $5 less on a shirt if I want. But the oil companies now can look to have all their steel designed, and built in the U.S and shipped to Canada and save a lot of money now. Or they might balk at the production costs that they now face in Canada and refuse to produce anymore oil.

What good is my purchasing power if I have no income with which to buy stuff? I've tried to look after my money, but I'm only 31 and don't have enough money saved to live out the rest of my life. I still need to draw an income and my earning ability is largely based on our core industries being willing to spend on expanding and upgrading their equipment. If they stop spending...well I have less money, and I have to stop spending, and eventually that trickles down, and it affects a lot of people beyond myself.

But if I was a retired Canadian who had 2 million in the bank or I had more than enough money to my name in assets that I could afford for our economy to crash and burn, I'd sing a different tune.

Many industry will hurt, no doubt, but one good thing about the strong dollar is that Canadian economy will be forced to learn how to be compeditive, rather than gravy train off a crappy domestic currency.

The cost of living should come down a bit over time, those oakley's noted earlier will have to come down to par, cars may not because of the cost of handling.

[guzzy]

Originally Posted by psicodude

I agree that freight costs are higher in Canada, but $20k higher? I don't think so. I think it has become quite apparent that Canadians have been fleeced by the auto industry for a long time now. They were just able to use the dollar as an excuse, until now.

The other question I have is....what will the Bank Of Canada do (if anything) to put a halt to this trend. I mean, at some point the strong dollar will really start to hurt the economy....right?

I do agree that the auto industry has been fleecing Canadians for a while now. the point I was making is if the dollars are even it will still always be cheaper to buy in the US, not including the fees and duty you will pay to bring the vehicle into Canada. Canada is not a big market to auto traders. You have to think that California sells more GM's than all of Canada. The auto industry just doesn't care enough, it's not a big enough market.

[guzzy]

Originally Posted by The Yen Man

Oh yah? How do you figure? Wouldn't companies moving production to the States and massive layoffs as a result of plants closing down in Canada affect the general population?

no that only affects the Ontario economy. The gov't there has put so much stock into the UAW that they have to support them. They are blind like the US gov't to not see the UAW is the worst of all unions. They have destroyed the quality of production of domestic vehicles. If you have GM or Ford at $60000 and a toyota or Honda for $60000 you are guaranteed that the GM or Ford won't even be comparable in quality to the same Honda or Toyota.

With that being said, there is still a trend seeing more production moving to Canada because the UAW is fleecing the US plants with health care and benefits. Because health care is free(if you want to call it that) in Canada it becomes much cheaper to produce, even with the dollar at par.

[Bobblehead]

Originally Posted by guzzy

no that only affects the Ontario economy. The gov't there has put so much stock into the UAW that they have to support them. They are blind like the US gov't to not see the UAW is the worst of all unions. They have destroyed the quality of production of domestic vehicles. If you have GM or Ford at $60000 and a toyota or Honda for $60000 you are guaranteed that the GM or Ford won't even be comparable in quality to the same Honda or Toyota.

With that being said, there is still a trend seeing more production moving to Canada because the UAW is fleecing the US plants with health care and benefits. Because health care is free(if you want to call it that) in Canada it becomes much cheaper to produce, even with the dollar at par.

The Canadian Auto Workers (CAW) have not been affiliated with the UAW for years.

[Freeway]

The Canadian economy works via exports, which work better when we have a weak dollar because other countries can convert their currency into Canadian dollars and buy tons of Canadian products/goods/resources. A strong dollar makes it more expensive to do this, and thus hurts exports (and the economy as a whole), which is why the Bank of Canada has been trying to make the dollar less valuable for years. The problem is the American economy just did a nosedive, making it impossible for us to do much to change the value of our currency.