R.I.P. Loonie
- Thread starter fuji
- Start date
Because they have both had a bad year.I thought that CAD is more tied up to to USD than EUR , how come CAD/EUR exchange rate stayed the same ?
I'd like to see royalties and similar fees belong to the federal government and be placed in a transparent public fund much like the Norwegian model.
It makes no sense to me that monies related to national resources go into provincial coffers.
A petro savings account would do a lot to stabilize the loonie.
It makes no sense to me that monies related to national resources go into provincial coffers.
A petro savings account would do a lot to stabilize the loonie.
Currency movements are largely exacerbated by currency speculators. The ones who short the currencies in order to make a quick profit. There is usually a bounce-back when shorters over-extend themselves, or when the Central Bank decide to teach them a lesson by buying large amounts of their own currency.
The Saudi profit margin on $47 oil is $17. That means they have to sell twice as many barrels at $47 to fund their rich social programs to keep the natives happy. Unless the Saudis can bankrupt the competition (Russia, U.S. Canada, etc.), it seems like a losing strategy (especially since the U.S. does not have an oil export economy and now they can get oil at $47).
The USD is up because countries are dumping US Treasuries en masse. China and Russia in particular. It's not a strength of the USD and the US Economy. QE and the random printing of dollars and ZIRP ( Zero Interest Rate Policy ) is coming home to roost. There was a time when Canadian dollar was higher than the USD and we had over-employment. But back then we were on a Bi-metallic standard and we used to issue the currency at little to zero interest. Saying that our low dollar is a boost to exports is somewhat shallow as it implies that if race to the bottom and allow the dollar to go to zero this would be great ! It's not. An exporter used to figure out ways to be more efficient. Innovative. Increase technology and training. Now we just fall back on, well the dollar is down so it's good for exports. We lost 400,000 manufacturing jobs when the high tech bubble burst. I'll tell you right now you can't just take industry that you've exported to another country and just re-tool a factory because you now have a slight dollar advantage. It takes years to rebuild and re-tool a factory. The only tool left in the tool kit for these psychotic Central banks is to print money and hyper inflate the currency. It's baked int he cake and anybody with a couple of working brain cells can put this together.
It doesn't, unless they have decided to hold US cash instead of bonds. Since cash pays no interest it is unlikely that they are keeping USD cash after they sell their bonds and are instead moving their money elsewhere.
When the Chinese sell a $1m bond they exchange a piece of paper for dollars, which reduces the number of dollars otherwise in circulation. That reduction in the money supply could have an effect BUT only if the Chinese stop there.
If next they sell their USD and buy RMB or EUR or some other currency then they are flooding those USD back into the market and at the same time creating an oversupply of USD on currency exchanges.
That operation will drive the value of the USD down, not up.
When the Chinese sell a $1m bond they exchange a piece of paper for dollars, which reduces the number of dollars otherwise in circulation. That reduction in the money supply could have an effect BUT only if the Chinese stop there.
If next they sell their USD and buy RMB or EUR or some other currency then they are flooding those USD back into the market and at the same time creating an oversupply of USD on currency exchanges.
That operation will drive the value of the USD down, not up.
It is strictly that the gold standard ( currently the USD ) is being sought after as a safe haven for investors.What's really happened to currency is that the USD is up, those tied to USD are also up, nearly everything else is down.
As far as the manufacturing sector goes, there has been a general lack of investment to upgrade equipment and such.
The other problem that plagues Canada is the heavy burden of the public service and the cost of its operation.
Govt spending as a percent of GDP:The other problem that plagues Canada is the heavy burden of the public service and the cost of its operation.
US: 41.6
Canada: 41.9
You think the extra 0.3% is the difference?
I predict that the Fed will find another excuse to not raise interest rates this year as they are terrified and apprehensive. This will take some pressure of the BOC for the time being. Going into 2016, a US election year, not much if any action will happen from the Fed. A diet of stimulus money is impossible to be weaned off of. The loonie will be stuck in a state of malaise in 2016 with depressed crude prices. Should the very remote possibility of the NDP forming a government occur, the loonie should drop precipitously the following day. By 2017, Iranian crude will start to flood the world markets, contracting the tar sands output and the development of future oil projects. Fracking will be the only bright spot in Alberta, but not enough to lift the dollar. All provinces in Canada including Alberta will be have not provinces. Japan will remain in recession as a big chunk of their workers will retire without enough younger replacements available and no foreign workers allowed in due to their xenophobia. Their will be a massive stimulus injection front the ECB. The Toronto Maple Leafs will make the playoffs in 2016.
Because it was a general flight to USD......I thought that CAD is more tied up to to USD than EUR , how come CAD/EUR exchange rate stayed the same ?
So you are saying pigs can fly.The Toronto Maple Leafs will make the playoffs in 2016.
