Unfortunately for me, since I’m currently in the US, the recent dramatic drop in the Canadian dollar is causing everything to suddenly become almost 20% more expensive. I’ve been waiting for the dollar to turn around again – even last month’s 10% difference is looking really good now – but I fear it’s going to take longer and I’ll be stuck paying 20% more for stuff. It seems so unfair, especially when you consider the recently disclosed fact that Canada has the safest banking system in the world (yes, several points higher than Switzerland and Luxembourg).
But commodity and resources drive (much of) the Canadian economy. And right now, not much growth is predicted across the globe for the next while. Just yesterday, I think, the Wall Street Journal reported that China has just seen its first quarterly GDP decline since it opened its markets! So what this means is that there is apparently going to be less demand for Canada’s potash, oil and zinc.
I’m feeling fairly optimistic about the market mess. Maybe it’s because I knew it was coming and so I am not as surprised and certainly not scared by the media reports, who need to milk a good story for everything it’s got.
Pure fundamentals, though, seem to suggest that there’s no way around it but that the US dollar really has no support and it’s gonna start falling back again when the markets realize the US economic fundamentals (why this hasn’t happened yet is completely baffling!).
Obama’s election might also help prop up the markets, at least for a while. I have a feeling he’s going to have a bit of a stabilizing effect. What do you think? Anything could happen in the next two weeks, but it seems likely we’re going to see Obama’s face in all the 8×10 frames hanging in government offices everywhere. And in another year, maybe… super inflation or even hyperinflation?Related Posts
- Historical Highs and Lows of the Canadian Dollar Against the US Dollar
- As Canadian Bank Earnings and Economy Go Down, Canadian Dollar is Up
- Peter Schiff on the Rally and Why You Still Need to Buy Gold
- What's Happening With the Canadian Dollar?
- Market Jitters: Are We About to See the End of the Risk Rally and Bear Market Bubble?