Interesting article on the rising dollar

[mousy_in_canada]

I found this article interesting!
taken from http://www.thestar.com/Business/article/256408

Expectation mount that Canadian dollar should soon reach parity with U.S. greenback
Sep 13, 2007 05:52 PM
Canadian Press
OTTAWA – The Canadian dollar rode hot crude oil prices to a new 30-year high today as expectations mounted that the high-flying loonie will soon reach parity against the flagging U.S. greenback.

The Canadian loonie reached an intraday high of 96.98 cents US, tops for the currency since Oct. 26, 1976, before settling down to 96.83 cents at the close of markets in Toronto.

The loonie's latest assault on parity began after today's negative jobs report in the United States confirmed the world's leading economy was being hammered by the continuing sub-prime mortgage crisis, whereas in Canada continued job growth pointed to the economy's underlying strength.

But it is not just the weakness of the U.S. currency that is giving the loonie wings, say economists. Canada's economy, boosted by high world demand for commodities, remains strong, they say, and likely to outperform the United States well into next year.

The key to the loonie's surge is simply that Canada has plenty of what the world needs, said Sal Guatieri, senior economist at the Bank of Montreal.

"All the stars are aligning again in its favour – commodity prices, especially energy, gold is higher, wheat has been on a tear," he said.

"The fear that recession would crunch commodities hasn't played out, so for that reason we've seen the dollar pick up about five cents since its recent low in mid-August when the credit turmoil hit the markets."

And the dollar will likely get an additional boost next week when the U.S. Federal Reserve Board is widely seen cutting interest rates in the United States by one-quarter of a percentage point, making investments north of the border more attractive.

Many analysts now see the dollar reaching parity, even if on nothing more than fumes.

"We're getting to the stage where parity in itself might become the draw for traders," said Matthew Strauss, the Royal Bank's senior foreign exchange strategist.

"As illogical as it might be, once you get to 98, 99 cents, there's a real risk the market will push it higher just to get to parity."

One bullish analyst, Dennis Gartman, who writes a business newsletter in the United States, said it's possible for the Canadian dollar to actually hit as high as $1.05 U.S.

A strong dollar is expected to further exacerbate the slump in central Canada's manufacturing heartland, which is heavily dependent on exports to the United States.

But it's a positive development in the Bank of Canada governor David Dodge's battle to control inflation. Dodge, who delayed increasing interest rates last week, may now be able to ride out the end of his term at the end of January without touching rates.

Strauss said the dollar is carrying much of the load in dampening inflationary pressures, directly by reducing the cost of imported goods and indirectly by depressing manufacturing and consumer spending.

"It is helping the Bank of Canada tighten monetary policy," he said. "If the dollar was doing down, the pressure on the bank to raise rates would have been severe."

In a speech in London this week, Dodge reiterated that he believed Canadian interest rates were set at the "appropriate" level, saying the risks of inflation were weighted evenly between upside and downside.

But Guatieri predicted that the bank's next move will again be to hike rates, although not until next April.

In a report to clients, Guatieri said Canada would ride out the global credit squeeze relatively smoothly, noting the conditions that produced a strong 3.7 per cent growth rate in the first half of the year were still in place to "navigate through all but the most severe of gale force winds."

"Supportive interest rates, elevated commodity prices, and sound corporate and fiscal finances suggest Canada's economy will hold up fairly well, and perform better than the U.S. in the year ahead," he said.

 

[ont/ohana]

Here's hoping it goes to $1.05, thanks for the article. I can see another bout of addonitis coming in the future

 

[mom_rules]

RBC was at 1.04310 at noon.
SB was 1.0371
TD was 1.0417

 

[mousy_in_canada]

1.00 CAD= 0.981748 USD
Canada Dollars United States Dollars
1 CAD = 0.981748 USD 1 USD = 1.01859 CA

according to Xe.com!!!
wowsa! 98 cents!!!

 

[mom_rules]

1.00 CAD= 0.981748 USD
Canada Dollars United States Dollars
1 CAD = 0.981748 USD 1 USD = 1.01859 CA

according to Xe.com!!!
wowsa! 98 cents!!!

Holy cow! How do you get that rate?

 

[mom_rules]

still at 1.044 at RBC

 

[mousy_in_canada]

Banks always charge 2 cents more but the actual trading rate is here
http://www.xe.com/ucc/

I just asked my sister who works at the bank to get me that rate listed on ex.com
I wonder when it is at par if the banks will still charge 2 cents more with their fees....

 

[drag n' fly]

We are buying park passes today at 98.48. Time to get some US dollars!

 

[Allegro]

The commercial rate is always better than the rate the banks give you. Also there is the whole - 2.5% credit card service charge that's annoying as ever. Still - looking so much better than our last trip South.

 

[Eveningsong]

Get a Canadian US Credit Card. Buy in US Dollars, Pay in US Dollars, no 2.5% fee added to your purchases.

TD Canada Trust has a US Visa for $25.00 US per year. It comes with all kinds of goodies too. It was the lowest price Canadian US Funds Credit Card I could find. The next lowest was CIBC.

RBC has a Canadian US Visa with rebates, but it costs more.