Canadian dollar almost at parity with US, will pass it soon

[notyoueither]

You've just made clear that the terms of your argument are further out than Plan Nine.

Prior to now you've been content to simply play the idiot without explanation.

Your argument's validity is irrelevant. Your argument is irrelevant.

[Kuciwalker]

Originally posted by notyoueither
You've just made clear that the terms of your argument are further out than Plan Nine.

Prior to now you've been content to simply play the idiot without explanation.

I guess it would seem that way, to someone who apparently couldn't read my original post.

I guess it really does mean you've run out of arguments for me to debunk.

[Kuciwalker]

The only reason I wouldn't suggest the scenario the other way is the relative numbers of CDN and USD in circulation.

[notyoueither]

You're as sharp as a sack of wet mice, boy.

[Kuciwalker]

You are old.

[notyoueither]

A bit, but you also remind me of someone.

[Wezil]

Originally posted by notyoueither


I am not convinced we need a lower Canuck buck.

We built the auto plants in an era of an over par Canuck buck.

The last 20 years and a 0.65 cent dollar at the nadir were a function of adjustment to new trading patterns. Between 1970 and now our focus shifted from the CW to NA.

Canadian workers can compete with any other industrialised country. What we need are businessmen who are not lazy and grown obese banking on a diet of cheap Canadian labour.

Thank you.

Tingkai - Yes, we have high taxes and this also needs to be addressed.

[Wezil]

Originally posted by notyoueither

The auto industry opened and grew here when the US dollar was way below the Can Buck. The high value of the Can Buck did not hold us back then. It should not now.

And they are still opening here. Toyota is doing mega-expansion just down the road from me.

[Arrian]

Prepare for revenge for all of those canadian-currency-value jokes.

Duly noted. All's fair. Have fun.

-Arrian

[Tingkai]

Originally posted by Wezil
Tingkai - Yes, we have high taxes and this also needs to be addressed.

Maybe, maybe not. Most Canadians recognize that good government comes at a cost and that there is no such thing as a free lunch. They may grumble about paying taxes, but they know it is a fact of life. Many of our American cousins believe that no government is good government while expecting government services for free.

The exchange rate also reflects differences in inflation, interest rates and various regulations.

I would contend that the averaged exchange rate between 1975 and 2000 represented a natural rate that took into account the differences between the two economies. Afterall, the value of the Canadian dollar is set by the market, not the politicians.

The rapid rise of the Canadian dollar vs the greenback over the past five years occurred when all else remained relatively the same. Therefore, the Canadian dollar is artificially overvalued. In other words, the market has become flawed in the past five years.

[Wezil]

Originally posted by Tingkai


Maybe, maybe not. Most Canadians recognize that good government comes at a cost and that there is no such thing as a free lunch. They may grumble about paying taxes, but they know it is a fact of life. Many of our American cousins believe that no government is good government while expecting government services for free.

This of course becomes a political argument. IMHO I am paying excessive taxes to support programs/causes/party bagmen that does not contribute to good government nor services.

The rapid rise of the Canadian dollar vs the greenback over the past five years occurred when all else remained relatively the same. Therefore, the Canadian dollar is artificially overvalued. In other words, the market has become flawed in the past five years.

Simply not true. Deficit spending is now a thing of the past in this country where it had been the norm for decades. Simultaneously, the US has been continuing to run large deficits.

Also, natural resource prices are much higher over the last five years. This of course will strengthen the Cdn dollar.

I see nothing artificial about it.

[Tingkai]

Originally posted by Wezil

Deficit spending is now a thing of the past in this country where it had been the norm for decades. Simultaneously, the US has been continuing to run large deficits.

Also, natural resource prices are much higher over the last five years. This of course will strengthen the Cdn dollar.

I see nothing artificial about it.

It is artificial in the sense that the Can-U.S. exchange rate no longer reflects natural production cost differences which the rate of about $1 Can = 75 U.S. cents used to reflect.

So what we are seeing is an artificially high Canadian dollar and an artificially low U.S. dollar.

The primary factor for this distortion is the Republicans and their philosophy of spending without limits combined with tax cuts. The Republicans want a weak U.S. dollar because it helps to keep the U.S. economy inflated by making U.S. exports cheaper.

Meanwhile, the Canadian economy will suffer as manufacturers try to adapt to the new rates.

If there is one saving grace, as the weak U.S. dollar closes market opportunities for Canadian exports in the States, Canadian may develop other markets which would reduce our reliance on the U.S.

For example, the loonie to the euro has remained relatively stable so Canadian goods retain their previous competitive strengths in Europe.

[Wezil]

Originally posted by Tingkai


It is artificial in the sense that the Can-U.S. exchange rate no longer reflects natural production cost differences which the rate of about $1 Can = 75 U.S. cents used to reflect.

So what we are seeing is an artificially high Canadian dollar and an artificially low U.S. dollar.

The primary factor for this distortion is the Republicans and their philosophy of spending without limits combined with tax cuts. The Republicans want a weak U.S. dollar because it helps to keep the U.S. economy inflated by making U.S. exports cheaper.

Meanwhile, the Canadian economy will suffer as manufacturers try to adapt to the new rates.

If there is one saving grace, as the weak U.S. dollar closes market opportunities for Canadian exports in the States, Canadian may develop other markets which would reduce our reliance on the U.S.

For example, the loonie to the euro has remained relatively stable so Canadian goods retain their previous competitive strengths in Europe.

I've never seen somebody that so stubbornly refuses to be wrong even when they so obviously are.

OTTAWA - The Canadian dollar showed its mettle Friday, hovering around parity throughout the day, as a top U.S. government official suggested the loonie's surprising strength may not be short-lived.

Responding to a reporter's question that speculation was driving the loonie higher, Treasury Secretary Henry Paulson, in the Ottawa area to sign a new bilateral tax agreement, said there were sound economic fundamentals supporting the Canadian currency.

"This economy (Canada's) looks very healthy to me," he said. "I've been watching for some time and everything from the progress on the deficit, the growth, this is a solid economy."

The loonie opened at par Friday but moved lower on a disappointing retail sales report that suggested Canada's economy was slowing.

However, by early afternoon, the loonie was trading well above parity, peaking at US$1.0040 (four one-hundredths of a cent above parity), before closing at 99.91 cents US in Toronto, up four-hundredths of a cent from Thursday.

Paulson's positive assessment of the Canadian economy were echoed by Finance Minister Jim Flaherty, who said Canada's economic fundamentals favoured the loonie's strength in comparison with the greenback.


"We have a strong commodities market and prices are good, except for (natural) gas," he said. "We have the strongest economic fundamentals in G7. I leave it for the markets to take into consideration all the variables."

As the Canadian economy has moved from strength to strength, policy makers, including Bank of Canada governor David Dodge, have speculated that Canada could be sideswiped by the weakness in the U.S. housing market and the turmoil in the capital markets emanated from the subprime mortgage crisis.

But while he admitted the situation is serious, Paulson said he does not believe the U.S. will head into recession, adding that the remarkable strength of the world economy is lifting all boats, including the once-dominant U.S.

"The housing slowdown and the capital markets turbulence we're going through now will take a penalty to our growth, but we're a diverse economy and I'm very comfortable we're going to continue to grow throughout this year," he said.

"Clearly we are benefiting in the U.S. economy from growth outside the U.S. and that's a good thing," the treasury secretary added. " We've never witnessed anything in the past like we've seen the last several years. We have developing countries (in Asia) growing three times the level they grew in the 90s and twice as fast as the developed countries. This is a very good thing."

Early Friday, Statistics Canada reported that retail sales fell 0.8 per cent in July to about $34.3 billion, mainly due to a decline in the automotive sector and slight decreases in five other retail sectors. But the sobering news only affected the currency briefly.

"Two consecutive months of declines in real retail sales, even prior to the credit market turmoil which unfolded in August, shows that the Canadian consumer is not bulletproof," said Doug Porter, deputy chief economist at BMO Capital Markets.

"Still, this pullback largely marks a correction after a massive 10.2 per cent annualized gain in the second quarter."

The loonie's rapid appreciation - up from 95 cents at the start of this month and from under 90 cents last spring - has come on the strength of Canada's resource-based economy. But the dollar's rise has squeezed the manufacturing sector concentrated in Central Canada.

Flaherty repeated Friday that the long-term health of Canada's beleaguered manufacturers will depend on how successful they are in modernizing and becoming more efficient.

"One of the advantages of a higher Canadian dollar is the easier acquisition of U.S. technology or technology from other countries priced in U.S. dollars," he added.

But frustration is building among Canadian consumers that they are not seeing the benefits a stronger dollar on store shelf prices. Two Canadian banks released reports this week arguing that Canadians are playing as much as 24 per cent more than Americans on the same product.

And respected auto analyst Dennis DesRosiers heard first hand that frustration after issuing a report maintaining there was very little variation in car prices between the two countries. DesRosiers was flooded with angry e-mails disputing his analysis.

"Your article on the price difference between Canadian versus American is either an outright misleading lie or ignorance and stupidity," said one typical e-mail.

Liberal MP Dan McTeague said Canadians have a right to know if they are getting ripped off and has asked Industry Minister Jim Prentice to order Statistics Canada to make public price differentials between the two countries. He also wants the House industry committee to hold public hearings on the issue.

"If we're going to lose in manufacturing and suffer a loss in tourism from the U.S., there should at least be a benefit for Canadians in stronger purchasing power," he said.

Meanwhile, pressure is building on the Bank of Canada to follow the lead of its American counterpart and cut interest rates at it's next announcement date, Oct. 16.

Friday's slumping retail sales figure adds fuel to calls by the Canadian Labour Congress and the Canadian Auto Workers for the central bank to reduce interest rates by half a percentage point.

Scotia Capital economist Meny Grauman said the bank is unlikely to move from its current neutral policy stance, but added there is now an "opening for discussions about the eventual need for rate cuts down the line, especially if problems in the U.S. intensify."

Link: http://cnews.canoe.ca/CNEWS/Canada/2...511688-cp.html

[pikesfan]

Originally posted by Ben Kenobi


Historically we have done most of our trade with Britain..

Yes, historically, but that hasn't been the case since the 30s, and maybe even the 20s. In the 1850s/1860s we did a lot of trade with the US [Reciprocity], but then the Americans became protectionist.

I don't know whether to be happy or sad about parity. As a patriotic Canadian I'm happy but because I live and work in the States I don't get paid in Canadian dollars and now I feel poor. Oh, well, I guess it makes up for a few years ago when I felt quite rich indeed whenever I visited home

[Tingkai]

Originally posted by Wezil
I've never seen somebody that so stubbornly refuses to be wrong even when they so obviously are.

Ah, the classic response of someone who can't discuss the topic.

As for the article you posted, you do realize the politicians were trying to avoid taking blame for their misguided policies.

I love how the Conservatives are ready to help out Canadian companies. Their solution: Buy American.