(18 votes, average: 3.39 out of 5)
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In April of 2009, I started talking about FXC and the rising value of the Canadian dollar for many reasons ranging for the world class quality of the banking system to the Fear trade in the States pouring the sheep minded masses back into the losing proposition of the commodities.
I mean really, do you really believe that the price of Oil is going back to $140?
I hear some old fat dude in a red suit comes by on Christmas Eve with a burlap sack too.
Back to Reality
The Bank of Canada under estimated the power of the Canadian economy. There – it’s said. Rather than making outlandish and presumptous predictions it turns out that Mark Carney is something of a realist:
“Following a deep, synchronous recession, recent indicators point to the start of recovery in major economies, supported by aggressive policy stimulus and the stabilization of global financial markets,” the Bank of Canada, which demurred from making a new GDP forecast, said in its latest policy statement.
….
The North American trade figures were echoed in France, where the government said international shipments by the world’s sixth-largest exporter soared 9 per cent in July. Stock markets in New York, Toronto, Sao Paulo, London and Frankfurt all rose on a general sentiment that a global recovery is afoot.
….
And to give the bruised and battered bears a bare whiff of hope:
In updating the Canadian government’s fiscal projections yesterday – which include a revised forecast for a budget deficit of $55.9-billion in the current fiscal year – the best Finance Minister Jim Flaherty said about the economy was that it is in the “early stages of a fragile recovery,” telling an audience in Victoria that he would push ahead with his stimulus program.
However, FXC watchers, please note that there is a strong possibility of another dip in the price of the Loonie, as the central bank here is still trying to jawbone it down:
But “persistent strength in the Canadian dollar” on exchange markets “remains a risk to growth,” the bank said. The loonie, which closed up 0.19 of a cent (U.S.) to 92.70, has been climbing recently.
Commentary
I noticed I received an all time low of 3 points on my last post about FXC due to some anonymous critics but, that’s what the online life is about.
Rate this one a one star if you like, the reality of things still means that the Loonie is rising for some of very salient reasons:
- The Fear Trade is pushing up the price of commodities, of which Canada is a world class supplier
- The Banking System here is world class… i.e. the Bankers know their role and don’t try to sink the boat
- Expecting a repeat of last year’s event is mostly silly
- Canada had a surplus going into the downturn as opposed to the US
So, buy on the dip if you like. FXC is going higher.
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