Canadian Dollar Reaches Parity with Greenback

altiplano · Post by **altiplano** » Thu Sep 20, 2007 9:51 am

It is about time.

Canada dollar jumps above parity as greenback sags

TORONTO (Reuters) - The Canadian dollar rose above parity with the U.S. dollar for the first time in 31 years on Thursday as the Canadian currency's commodity-fueled rise was helped by a sharply falling greenback.

Canadian bond prices fell alongside U.S. treasuries.

The Canadian dollar rose as high as C$0.9996 to the U.S. dollar, or US$1.0004, according to Reuters data, before dipping back below the level.

At 11 a.m. (1500 GMT), the currency was at C$1.0003 to the U.S. dollar, or 99.97 U.S. cents, up from C$1.0152 to the U.S. dollar, or 98.50 U.S. cents, at Wednesday's close.

The historic level -- last hit in November 1976 -- follows a 62 percent rise from early 2002, largely fueled by surging oil and metals prices and the broad decline of the U.S. dollar.

It was the latter influence that drove the gains on Thursday, as the greenback hit a record low against the euro, weakened by the U.S. Federal Reserve's 50 basis point rate cuts on Tuesday, and concerns that further easing could follow.

The Fed made the move to shield the U.S. economy from a deepening housing slump and credit market turbulence.

"It was a developing environment that was very bearish U.S. dollar but it didn't really seem to unfold right away," said David Watt, senior currency strategist at RBC Capital Markets, referring to the rate cuts.

Oil prices, which have contributed to an exploration and production boom in Canada's Western provinces, hovered just off record levels hit on Wednesday. U.S. light crude was steady just above $82.

Gold prices, which also help boost the Canadian dollar due to Canada's gold exports, hit a 28-year high.

Watt said strategists are now trying to determine how far past the key level the Canadian dollar will go before retracing.

BONDS LOWER

Canadian bond prices fell alongside U.S. treasuries after a surprise drop in U.S. weekly jobless claims eased worries about a weakening U.S. labor market.

The two-year bond dipped 4 Canadian cents to C$99.15 to yield 4.274 percent, while the 10-year bond fell 14 Canadian cents to C$96.71 to yield 4.420 percent.

The yield spread between the two-year and 10-year bond widened to 14.6 basis points from 15.4 at the previous close.

The 30-year bond dropped 25 Canadian cents to C$108.64 to yield 4.471 percent. In the United States, the 30-year treasury yielded 4.883 percent.

The three-month when-issued T-bill yielded 4.09 percent, unchanged from the previous close.

kilpicki · Post by **kilpicki** » Thu Sep 20, 2007 9:56 am

I get paid in USD, It sucks.

altiplano · Post by **altiplano** » Thu Sep 20, 2007 10:01 am

Looks like you need to ask for a raise.

Surly Joe · Post by **Surly Joe** » Thu Sep 20, 2007 10:13 am

Canada simply rocks!

invertedattitude · Post by **invertedattitude** » Thu Sep 20, 2007 10:35 am

I feel proud today

Doc · Post by **Doc** » Thu Sep 20, 2007 10:55 am

I'm going to convert to US funds...because this will not last. Say goodbye to that moron in the White House, and we'll have a 75 cent loonie again!

Rockie · Post by **Rockie** » Thu Sep 20, 2007 3:47 pm

Doc wrote:I'm going to convert to US funds...because this will not last. Say goodbye to that moron in the White House, and we'll have a 75 cent loonie again!

I agree. The Loonie isn't going up, the US dollar is going down. And as soon as someone starts minding the store again in the US that will change. I bet the day after Dubya hands over the keys to the liquor cabinet there is a big surge on the greenback.

xsbank · Post by **xsbank** » Thu Sep 20, 2007 3:58 pm

I think this is bad news for us pilots, too. If the Canadian public stops buying here because they are being screwed by merchants, many small retailers will bite it. Also, why buy a car in Canada if its cheaper across the border? That will have a ripple effect and many people who cannot get work or earn a living will stop flying...logging will collapse, killing coastal floaters and charter companies and hurting Pacific Coastal, for example.

Canadian shipyards will take a beating because a lot of their work was from Americans.

This is not good news because we don't need a recession now.

invertedattitude · Post by **invertedattitude** » Thu Sep 20, 2007 4:17 pm

You can buy two Honda CRV's in New Hampshire for the price one One in Moncton

Sheila · Post by **Sheila** » Thu Sep 20, 2007 8:10 pm

I'm going shopping!! This is going to be great for shopping across the border, especially for Christmas.

If they are predicting a recession in the US that might keep our dollar at par for awhile.

Doc · Post by **Doc** » Fri Sep 21, 2007 9:22 am

I can see car dealers biting the dust. I think it looks good on them. Too long have we been screwed to the tune of 30-40% on car/truck/bike prices! I can pay 38K for a truck in Kenora that'll cost me 26K across the border! A new BMW R1200R lists for 19K in the 'peg. In the States, it's 13K! Who shops in Canada??? You can't afford NOT to head south to shop! A Macbook, in the States is 800$. In Canada 1400$...and the list just goes on!

Inverted2 · Post by **Inverted2** » Fri Sep 21, 2007 9:47 am

I am looking for a car soon. You'd be crazy not to go across the border and buy one. Canadian prices havent come down to reflect the changes to the dollar.

Ever bought a book or magazine lately? 4.99 US and 6.49 Cdn!

Wilbur · Post by **Wilbur** » Fri Sep 21, 2007 9:47 am

Some car and bike manufacturers are trying to prevent Canadians from paying less by buying in the US. HD won't honour warranties on bikes sold into Canada by US dealers, and some car makers are telling their US dealers that they are not permitted to export to Canada. As long as Canadians are willing to pay what will now be as much as a 50% premium over what Americans pay, you can bet more companies will move to prevent their dealers from exporting.

Of course, you can always buy a used car down south and bring it home. When enough people start doing just that, the prices in Canada will start coming down.

Doc · Post by **Doc** » Fri Sep 21, 2007 10:49 am

Wilbur, I've emailed at least ten dealers so far. They are totally willing to sell to a Canadian. As far as H-D goes, they are the only retailers I've run into that are passing some of the savings to the Canadian consumer. eg. Winnipeg Harley charges only 8% over US MSRP. That's close enough to buy a Harley in Canada...if you want a Harley. BMW Canada wants 500$ for a letter that covers call backs, and warranty issues. Still cheap!
If you run into a dealer unwilling to "play ball", either go next door, or buy a demo! Only an idiot takes cars to dealers for service anyway! For warranty work, make it a shopping trip to the States for the day to get it fixed. See, there's always a way around these things.
Bottom line. For the 6K you save by buying your new BMW R1200R in the States, what's a shopping trip??

Dust Devil · Post by **Dust Devil** » Fri Sep 21, 2007 12:26 pm

I'm getting about $30,000 worth of avionics work done to my ho in the U.S. This is great news. All the exporters that are whining have had the gravy train for the last 30 years. Now it's time importers reap some rewards. Plus I'm considering buying a Caravan so that makes quite a difference to a 2 million dollar purchase. Good times!

invertedattitude · Post by **invertedattitude** » Fri Sep 21, 2007 2:47 pm

Most Canadian car dealers won't honour the warranty on an American bought car, just be warned.

Though with the money you save who cares.

Doc · Post by **Doc** » Fri Sep 21, 2007 4:38 pm

I think, for the 35-40% I save buying in the states, I can afford to go to the states for the odd bit of warranty work it may need. And while I'm there, I can buy other things I don't want to be screwed over by Canadian retailers for. I think you'll find the warranties are written by Ford, GM etc. not the dealerships. For 40%, I'm willing to risk it...hehehehehehe
I mean, we're talking thousands of dollars here. Not a couple of % points.

WJflyer · Post by **WJflyer** » Fri Sep 21, 2007 4:46 pm

Doc wrote:I think, for the 35-40% I save buying in the states, I can afford to go to the states for the odd bit of warranty work it may need. And while I'm there, I can buy other things I don't want to be screwed over by Canadian retailers for. I think you'll find the warranties are written by Ford, GM etc. not the dealerships. For 40%, I'm willing to risk it...hehehehehehe
I mean, we're talking thousands of dollars here. Not a couple of % points.

Toyota has made it clear that they will honour their warranties, no matter where you purchased them. So my next car will be a Toyota, besides the fact that they are efficient and reliable.