The Canadian Dollar now stands at about $1.05 U.S., making it as strong as it has been in the past few years, so what does that really mean? Investors are scared of the U.S. national Debt, for one, and Canada’s commodity laden economy looks attractive to investors as well.
So how shall we celebrate this strong Loonie?
Some Easter cross border shopping might be called for. I don’t think the stores close at all in the U.S. over Easter, whereas the stores in Ontario are closed both Friday and Sunday, so I would guess the border crossing at Niagara is going to be mighty busy this weekend. Other border crossings may be busy spots as well, and I would guess that those border U.S. towns and cities will be glad to see their neighbours from the North spending in their stores.
Will the Dollar stay this strong? That’s a very good question. My suspicion is our American cousins are now figuring out what Canada did in the 90’s, that a weaker dollar makes your exports that much more attractive to perspective buyers (around the world). I have seen conflicting arguments about how Canadian industry will deal with the strong dollar, the obvious reaction is concern about being unable to sell our exports because of the strong dollar. The converse argument is that Canadian companies can make capital expenditures and get more infrastructure (i.e. machinery and such) and thus will be able to make their companies more efficient.
Either argument about Canada is plausible, I guess the telling statistic to watch is whether the Employment numbers continue to improve or not. If there are more folks employed, who really cares about the strength of the dollar? Yes it’s a simplistic statement, but the way a lot of folks look at this as well (especially if they are employed).
Given this is Easter weekend, there won’t be a traditional Friday post, and there will be not as much action on Twitter either. Enjoy this holiday weekend with your Family, I plan on doing the same.
Really, it does not take a lot to build a strong currency. Most of the time it does not help, unless you are exporter of raw materials and importer of most of the consumables.
While the USA currency is weaker, it is actually helps them – we are not going to pay the debt back, as for the rest it is easier to sell made in the USA goods.
Your point about the US figuring out what Canada did in the 90s is very relevant. Just as Canada came to the realization that its growing debt was not sustainable, the US may actually make some of the difficult decisions that Canada made at that time and start to get their debt under control. If they manage to do that over the next few years we should see the US dollar start to strengthen again. The next year or so may be the best opportunity you will ever have to do some shopping in the US.