21st September 2007 10:55 AM |
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Lazy Bones |
Canada's loonie hits parity with U.S. dollar
Greenback also reached a new record low against the euro
The loonie or Canadian dollar next to the U.S. dollar
The loonie, the Canadian dollar, moved decisively above 99 U.S. cents, flirting with one-to-one parity with the American dollar for the first time since November 1976.
The dollar took another fall on currency markets Thursday, reaching one-to-one parity against the Canadian dollar for the first time in 30 years and falling to a new low against the 13-nation European currency.
The dramatic half-point cut in U.S. interest rates announced this week, while aimed at shoring up U.S. credit markets, also had the effect of further weakening the dollar versus other currencies by reducing the cash yield on dollars. A lower dollar can make travel more costly for U.S. residents and can also pose the risk of making imported goods more expensive over time.
But for Canadians, it could mean more shopping trips to the U.S. as their loonie reached parity with the U.S. dollar for the first time since November 1976. That means one U.S. dollar now buys one Canadian dollar. The loonie rose sharply against its U.S. counterpart this week after the Federal Reserve's surprising rate cut. The spreading interest rates between U.S. and Canada, which kept its equivalent rates stable, could make America's northern neighbor a more attractive place for German, Japanese, American and other foreign investors to put their money.
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The euro breached the $1.40 barrier against the dollar on Thursday. That level had long been seen as a key benchmark in terms of solidifying the euro's position on currency markets and giving it momentum toward becoming a reserve currency of choice — a position long held by the now-weakening dollar.
The 13-nation euro bought as much as $1.4064 in morning trading in Europe before falling back slightly to $1.4040, above its previous high Wednesday night of $1.3987, and more than the $1.3964 it bought in late New York trading.
David Jones, chief market analyst at CMC Markets in London, said the euro's rise is not likely to abate in the coming days, given fears about another interest rate decrease in the United States.
Closing the gap
In Washington, Federal Reserve Chairman Ben Bernanke told Congress that the credit crisis had created "significant market stress" and offered fresh assurances that regulators would take steps to curb fallout related to the mortgage mess.
Bernanke made the statement in testimony prepared for a hearing Thursday before the House Financial Services Committee. In his prepared testimony, Bernanke did not offer new clues about the Fed's next move on interest rates.
"I am sure we're going to see buyers moving in for the next target," Jones said, adding that he believes the euro will rise to $1.42 very soon.
"If not this week, it could be next week," he said. "People are using any weakness as a buying opportunity for euros."
Howard Archer, chief U.K. and European economist at Global Insight, said that $1.45 is a "serious possibility before the end of the year" because of the specter of more U.S. interest rate cuts.
"The Fed seems highly likely to cut U.S rates further, it now looks probable that the next move in U.K. interest rates will be down, while the ECB currently still retains a tightening bias," he said. |
21st September 2007 11:06 AM |
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Ten Thousand Motels |
When Clinton gets in she's going to have her hands full. But by mid-2010 she should have the mess straighened out. |
21st September 2007 11:16 AM |
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glencar |
I'm glad I didn't bother reconverting my Euros at the end of my recent trip to Ireland. |
21st September 2007 11:17 AM |
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Mel Belli |
quote: Ten Thousand Motels wrote:
When Clinton gets in she's going to have her hands full. But by mid-2010 she should have the mess straighened out.
Sigh. |
21st September 2007 11:23 AM |
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glencar |
quote: Ten Thousand Motels wrote:
When Clinton gets in she's going to have her hands full. But by mid-2010 she should have the mess straighened out.
What do you care? This whole thing ahs no effect on a couch potato such as yourself. None. Zilch. Nada! |
21st September 2007 11:26 AM |
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gimmekeef |
A parity situation is not really a great thing for Canuck economy.Lumber and other raw materials now can be purchased from US sources for same price with less freight.When the loonie was at 80% that extra 20% drove US companies to buy from Canada...Will be interesting to see teh short and long term consequences.....I would think there will Canadian pressure to lower interest rates there too which could drop the loonie down.... |
21st September 2007 11:28 AM |
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Mel Belli |
One of the byproducts of the sliding dollar is that U.S. exports are cheaper - and, hence, our trade deficit is going down. When the dollar was strong, everyone used to whine about that... There's always something to whine about. |
21st September 2007 11:28 AM |
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gimmekeef |
quote: Ten Thousand Motels wrote:
When Clinton gets in she's going to have her hands full. But by mid-2010 she should have the mess straighened out.
When/if the Iraq war slows or is ended..my fear is a recession which historically is a possibility....Hilary wont win...but if she did her hands will be full keepin Bill outta the secretarial pool.... |
21st September 2007 11:29 AM |
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glencar |
The decline of the $ has probably saved our manufacturing base from even more job losses. |
21st September 2007 11:37 AM |
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gimmekeef |
quote: glencar wrote:
The decline of the $ has probably saved our manufacturing base from even more job losses.
No doubt it has....plus tourism will thrive here as people find it too expensive to travel abroad (much less the fear and hassle)....This may in fact be a good thing... |
21st September 2007 11:40 AM |
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glencar |
I was planning on a trip to Spain in December but a free ticket on Southwest combined with the low $ will keep me in the US. |
21st September 2007 11:43 AM |
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gimmekeef |
Yes..when you travel and the US buck was worth more...you didnt think so much about the high consumption taxes in foreign places...Now we will..and choose to stay home in larger numbers... |
21st September 2007 12:27 PM |
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pdog |
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21st September 2007 12:29 PM |
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gimmekeef |
quote: pdog wrote:
Those damn Morans...lmaooooooo |
21st September 2007 12:40 PM |
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pdog |
I'm thinknig of traveling, where should I go?
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21st September 2007 12:45 PM |
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Mel Belli |
quote: pdog wrote:
I'm thinknig of traveling, where should I go?
I'm guessing with the "civilisation" spelling, this came from the U.K.? Either way, the "here be ..." lines give the impression that the most obvious sign of American insularity is jive-talk! |
21st September 2007 12:47 PM |
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pdog |
quote: Mel Belli wrote:
I'm guessing with the "civilisation" spelling, this came from the U.K.? Either way, the "here be ..." lines give the impression that the most obvious sign of American insularity is jive-talk!
or....
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21st September 2007 12:50 PM |
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Mel Belli |
quote: pdog wrote:
or....
The one on the right needs a cheeseburger. |
21st September 2007 01:53 PM |
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pdog |
quote: Mel Belli wrote:
The one on the right needs a cheeseburger.
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21st September 2007 02:01 PM |
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Mel Belli |
quote: pdog wrote:
The can-do American spirit! |
22nd September 2007 07:52 AM |
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corgi37 |
Aussie dollar heading towards .90c U.S.
A U.S. recession would be great. Yanks drop interest rates again, and our dollar goes up even more!
Which is great news, as i am off O/S in Feb.
God bless George W. & dodgy house mortgage lenders. |
22nd September 2007 09:00 AM |
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Mel Belli |
quote: corgi37 wrote:
Aussie dollar heading towards .90c U.S.
A U.S. recession would be great. Yanks drop interest rates again, and our dollar goes up even more!
Which is great news, as i am off O/S in Feb.
God bless George W. & dodgy house mortgage lenders.
More accurate would be "Alan Greenspan's dodgy mortgage lenders." |