Yesterday the Canadian loonie started a downward climb again, but was still buying 93.1 cents USD (down from a Monday high of 93.9 cents USD). Last Friday the Canadian dollar was at 92 cents USD. If you didn’t get a chance to purchase American dollars then, consider doing so now.
How To Purchase US Dollars
There are a number of easy ways Canadians can buy US dollars before traveling. The best, though, is to do it in advance, while you can take advantage of good rates and price swings in the loonie’s favor.
Perhaps the easiest way is simply to open a US dollar chequing account through your usual bank, and then transfer money in there from your Canadian chequing account when the exchange rate is good (like it is right now). This process is even easier if you use online banking – you can do it in seconds and even watch the exchange rate move in real time so you can get the best rate possible.
What Is A Good CAD-USD Exchange Rate?
If this is your first time buying US dollars, or your first time paying much attention to what the rate is, this will be important for you to learn and keep an eye on in the future.
The Canadian dollar tends to rise in value whenever the price of oil goes up. The price of oil goes up, generally, when investors are bullish and/or the market is pricing in more economic activity. Thus, whenever you hear about the stock market doing well, or the economy getting better, check the value of the loonie. It has probably risen against the US dollar.
Generally speaking, the higher the loonie is the better, for consumer purposes. You want to try to buy US dollars especially any time the loonie rises above 90 cents American. Most analysts say that the market “likes” the Canadian dollar somewhere down around 80-82 cents – this being the range most favourable to Canadian exports. But with higher world demand for oil and other metals and materials which Canada has, there are many other factors which cause the Canadian dollar to rise (including, of course, a worsening US economy and US dollar).
It’s rare for the Canadian loonie to climb up near 96 and 98 cents American – so the closer it gets to these levels, make sure you take advantage of it, even if you only travel to the US during the summer. Broad trends and currency cycles don’t always happen very frequently, and are hard to predict. You may not get another chance to see the Canadian dollar at these levels for another year or more – it’s always hard to tell.
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I like your “buy on the dips” strategy. Don’t know if it will work since I try to avoid the Forex market, but another way for you to invest in the US Dollar ETF (ticker symbol UUP).
Well, I wouldn’t want to invest *in* the US dollar long-term…. this is more of a short-term strategy for when Canadians need to travel south…. I should make that clearer. This isn’t an *investment* strategy per se – just a practicality, since so many of us do make occasional trips south for business or long weekends, etc.
Isn’t it more profitable to but Euros in upcoming months? European economy seems to manage better with the crisis and two biggest European economy’s (France and Germany) announced a little grow of their economy product (about 0,3 % which is great because they was loosing last year month by month). I think that this will make Euro even stronger (though it is as strong as never been according to US dollar) and that could make this profitable business.