Monday, April 10, 2006


Canadas' Currency Gains On Greenback

Bloomberg report Canada continues to be a hot investment sector. "The Canadian dollar rose for a fifth day on speculation the Bank of Canada may keep raising interest rates, boosting the currency's appeal among international investors. 'The economy is possibly growing faster, which will put extra pressure on the Bank of Canada to raise interest rates,' said Sal Guatieri, senior economist at the Bank of Montreal in Toronto. 'The labor market is getting very tight, which may put upward pressure on wages and inflation. This definitely encourages the bank to go further.'"

"The Canadian dollar also gained as traders rebuilt their long positions, or bets that the currency will rise against its U.S. counterpart, said Trevor Dinmore, vice president of currency strategy at Deutsche Bank AG, the world's largest currency trader. 'Sentiments shift toward being bullish on the Canadian dollar,' said Dinmore, who is based in London. 'People are getting back to the trade.' If the Canadian dollar strengthens to C$1.1390 in the next few days, it may have the potential to appreciate further versus the U.S. dollar to C$1.1290, said Dinmore."

"The Canadian currency also benefited as prices of commodities increased. Commodities account for 35 percent of Canada's exports and about 10 percent of its C$1.09 trillion economy, the world's ninth largest. The Standard & Poor's/TSX Composite Index advanced 47.23, or 0.4 percent, to 12,288.44 as of 11:23 a.m. in Toronto. The benchmark, up 9 percent this year, reached 12,342.02 on April 6. Gauges of energy and materials stocks, which account for 46 percent of the S&P/TSX's value, have paced the index's gain this year."

"Crude oil for May delivery rose as much as 1.4 percent to $68.30 a barrel in New York, where it traded most recently at $67.90. Reports the U.S. is planning military strikes against Iran, increased concern supplies from the world's No. 4 producer will be disrupted."

you guys think the canadian dollar will be worth 1 US dollar soon?
Hard to say. The US is Canada's biggest customer. If the US dollar goes belly-up, I can see Canada going for a competitive devaluation of the loonie.

The only thing that is certain is that the loonie is a much safer place to be right now than the dollar.
CAD is one thing that I'm pretty confident with for the next five+ years. Only a Canada disaster would change my mind.
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