Strong CAD, Investors Shy from Left-leaning US Government

..."John Curran, senior vice-president at a Canadian foreign exchange firm seemed confused about the results saying:"If the Bank of Canada is telling us things are going to slow down due to global scenarios, I don't see why the market is not listening to the officials that are involved with the issues”. Other experts, taking a broader view have noted that the weakness of economic situations in the left-led governments of the US and Europe are a likely cause of the strengthening of confidence in Canada’s economy to continue to do outperform"....

"Historically, the Canadian has been valued at more than 1 US dollar."

Actually the exact opposite is true. The CDN$ historically has traded below par. As recently as 2001 the CDN$ traded as low as 66 cents US.

Led by a right-of-center government Canada has outperformed those (other) economies over the past several years and its sound approach has been appreciated by voters who recently reelected the Conservatives. The market now appears to be signaling its satisfaction with the Conservatives as well.

Maybe. But, on a more basic level Canada has plentiful domestic energy and agricultural resources. In other words we can feed ourselves, run our industries, heat our homes, and drive our cars without relying on foreign suppliers. A relatively low corporate tax rate might also have something to do with it.

It’s a little difficult to quickly find pre-1950 records. But it appears that the Canadian dollar was higher than the USD about half of the time between 1950 and 1977. Looks like the loonie was lower with expansions in US “free trade” until recently.

History of the Canadian dollar - CBC.ca
http://www.cbc.ca/news/interactives/map-history-dollar/

Which is the natural process of globalism in business. Trade imbalance beneficiaries were bound to eventually inflate (more jobs, production and real wealth per capita in those countries, etc.), causing their products to cost more to both them and Americans in the US. Net energy exporters like Canada will also increase with energy resources more in demand, and energy prices, rising.

It’s going to get more interesting, as yet more enormous numbers of people in other countries consume more oil (new drivers and users of many products).

The CDN$ was strong coming out of WW II and with Liberal governments in the post war period. Even though led by the Liberal party, their policies today would be described as far right wing. This kept the dollar close to par.

In the early 60's the dollar was devalued to 92 1/2 cents US$. Known as the "Diefenbuck" for those of us old enough to remember. It has spent the last 50 years or so languishing under par, which is not so bad when you are trying to export manufactured goods to the USA.

Canada's prospects look good because the country is on track to balance its budget (you read that right)in the next two years. Compare that to the US (1-2 Trillion $ deficit), or China or any country in Europe.

Additionally, because we produce and export so much oil, the Canadian dollar is virtually a petro-currency. The dollar tracks the price of oil to a great extent.

As time goes on, and the economies of China and Europe decline (crumble?) you will see wealthy and even middle class foreign nationals investing in Canadian real estate. The Chinese, in particular, have been buying "bolt hole" condos in Vancouver and Toronto for a long time. You need Canadian dollars to buy Canadian real estate.

The banking sector is very stable. There has not been a major bank failure in Canada since 1923. The banks are recognized internationally as safe.

PM Harper is not a lawyer or even a "community organizer". He is an economist by training, a conservative one at that. The head of the Bank of Canada, Mark Carney, was just appointed to head the FSB. The country is in very good hands.

Member since 1999. The liberals had been in power for decades and were spending the country into the ground. It was not the country I grew up in.

PM Harper has changed all that, but I'm still stuck with the screen name.

"Leveraged" the resources? I don't know about that. The resources are there for the taking. Just like in the US. God blessed this continent with limitless energy resources if you count uranium. If you can get past the environuts and the government, the two countries north of the Mexican border have absolutely unlimited potential.

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