Relentless stronger dollar got a break against Canadian dollar

Discussion in 'Forex - Currencies Forums' started by WaveWage, Oct 4, 2015.

  1. WaveWage

    WaveWage Well-Known Member

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    The USDCAD is reaching its two-week low, getting with its level of September, 17 meanwhile the last trading operation on FOREX is at October, 3. Right now, 1 $US = 1.3155 Canadian dollars. Nothing really worrying when it comes to levels like this, given the dollar got stronger and stronger over the last months, that the fact it keeps it up for a long time wasn't mandatory at all, especially with Canada, not so dependent of the China's manufacturing issues, after all.


    However, it seems the NFP did a bit of panic between Canada and United States, much like it done in Europe indexes. Do you find it appropriate? Would you start to think about Canadian dollar?
     
  2. Rainman

    Rainman Senior Investor

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    Earlier in the year some experts predicted that the Canadian dollar would be weakening till the end of the year. One of the reasons given for that was the expected Fed hike which didn't happen but it appears that they were right.

    http://ca.reuters.com/article/businessNews/idCAKBN0N01MA20150409
    Considering the fact that the US dollar is weakening and it's hard to tell which direction the Canadian dollar is headed, one should wait until things stabilize a little before they start thinking of this currency pair.
     
  3. WaveWage

    WaveWage Well-Known Member

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    Given the fact U.S. dollar is stronger than any other currencies, if you feel like the perspective of no hikes happening (there's still three months before the end of the year, after all) in the 2015 year is getting more probable, you can bet easily on the fact that Canadian dollar against USD will be a good currency pair to get, because Canadian dollar will become less weak against USD at that time.


    The problem is that, eh, if it's not right, USD will rise even more than it does now. The Quantitative Easing is a break for the USD rise because of its nature, and I think that when it stops, USD will feel safer.
     
  4. Corzhens

    Corzhens Senior Investor

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    Whenever the dollar would get stronger, the Peso would get weaker. And since the peso is directly connected to the US dollar in the forex market, the effect on us is always felt. When the dollar was low at 45 pesos, it was peace and quiet here. But a few months ago when the dollar got stronger and the exchange rate reached a high of 47 pesos, jubilation was heard among the families of the Overseas Workers who sends home dollar. Isn't it a big deal for those families if the dollar would reach 50 pesos by Christmas?
     
  5. ScooterBrandon

    ScooterBrandon Senior Investor

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    That's great news for Canadian Exporters!
    A low currency is actually a good thing, so much so many countrues work really hard to keep theirs low.
    Canada's dollar is a quasi-petrodollar so this is a normal course of action when you consider the plunge in the price of crude.
     
  6. WaveWage

    WaveWage Well-Known Member

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    The less you rely on external economies, the less important is the FOREX rate of a currency, so meanwhile many countries can be interested for exportation, some just less care to have a favorable rate than others because the domestic markets is more reliant on the primary resources they need to import (oil, gas, coal) rather than trying to get up the exportation. So Canadian's example of low currency isn't really wantable everywhere.


    After, my post was talking about the Canadian dollar getting less weaker than before (so, you can buy more USD with the same amount of CAD), so mainly you find it a bad news?
     
  7. ScooterBrandon

    ScooterBrandon Senior Investor

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    Yes in the short term your post was spot on, CAD gained a little ground but when you look at the year over year it's been down.
    When the dollar is up it's actually good too, because then companies can buy good quality equipment from places like USA and Germany at an affordable rate.


    In today's world "less you rely on external economies" isn't feasible or desirable.
    Your statement might have passed muster in 1915, but in 2015 we all know that we all have to rely on external economies. We know that protectionism isn't good, the law of comparative advantage tells us trade is a good thing.

    Most, if not all, major economies around the world are actively manipulating their currencies to be LOWER and not higher, that seems to be the trend at the moment.
     
  8. WaveWage

    WaveWage Well-Known Member

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    Except the U.S. dollar. I don't feel like the Federal Reserve tries hard to maintain a weak dollar, I would rather bet on the reverse: if they could, they would try to lessen the easing policy with the interest rates they are doing to assess a more stable economy, that will end up ultimately in a stronger dollar, basically the trend that's happening since the Q3 2014 where USD is getting stronger since that time. So I wouldn't say that all economies look forward a weaker currency, I think the mainly exporting wants that. And some of countries out there import really more than they can export.


    About the economy, it is still feasible in 2015. The idea is not especially to close you to the world, but not to be that reliant on any particular country. That's not the same thing.
     

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