Robert J Posted June 1, 2007 Report Share Posted June 1, 2007 Maybe I can now afford some new gear Loonie at par by year's end? Globe and Mail June 1, 2007 at 9:55 AM EDT The Canadian dollar will hit parity by the end of this year, Canadian Imperial Bank of Commerce predicted Friday. Talk of parity has percolated in the past month, but this is the first time a major bank has speculated it would arrive so soon. The last time the loonie traded at par was March, 1975. The comment comes as the Canadian dollar hovers at a 30-year high, driven by takeover activity, strong economic growth and expectations of rising interest rates. On Friday, the currency traded at 93.83 cents (U.S.), its highest level since July, 1977. “Between red-hot commodity and energy markets and huge capital inflows associated with an avalanche of M&A deals, the Canadian currency has plenty of octane left to take a concerted run toward parity against the greenback and hold it into at least the first quarter of 2008,” said Jeff Rubin, chief strategist and chief economist at CIBC World Markets. Continental Divide: Why Canada rocks as U.S. stalls Not everyone thinks that will happen so soon though. Bank of Nova Scotia, which for years has been forecasting Canadian dollar strength, isn't trotting out the parity prediction just yet. “I don't think we have quite all the factors in place yet to see parity,” said Camilla Sutton, currency strategist at the Bank of Nova Scotia. Namely, oil prices have remained steady. “With that moderation in commodities versus how the Canadian dollar's moved, that could end up being a bit of a weight on the Canadian dollar as we move forward.” She see a steady appreciation this year and next, but doesn't see the currency at par any time soon. Nor does the Royal Bank of Canada, which earlier this week boosted its forecast to 96 cents. “While parity is garnering more attention, it is not part of our base scenario as commodities are unlikely to stage a strong rally from current levels,” the bank said. Takeover talk heated up Friday with the Globe and Mail reporting that Stelco Inc. is up for sale, amid a flurry of foreign acquisitions of Canadian steel companies. Foreign takeovers tend to boost the loonie because they increase demand for dollars. Hostile bids are growing, CIBC said, and that means greater premiums. The premium on hostile deals has averaged 35 per cent over the last year compared to just 21 per cent for friendly takeovers, it said. Mr. Rubin's call comes after a report yesterday showed Canadian economic growth more than doubled in the first quarter, rising a better-than-expected 3.7 per cent. That growth, combined with a pickup in inflation, prompted the Bank of Canada this week to say interest rates may head higher as early as July. “With the national jobless rate plumbing 30-year lows and core inflation now bobbing above the Bank of Canada's target range, our earlier assumption of the Bank of Canada intervening against a further rise in the Canadian dollar with rate cuts, no longer seems tenable,” Mr. Rubin said. The currency has risen 9.4 per cent this year and 43.4 per cent over the past five years. Prime Minister Stephen Harper said Thursday any attempt to intervene with the strong dollar to save manufacturing jobs would be a “huge mistake,” Bloomberg News reported. “The rising Canadian dollar is a reflection of the underlying strength of the Canadian economy,” Mr. Harper told the news agency in an interview. The comment comes as the lofty loonie has sparked concern among some industries that it will prompt plants closures and layoffs. Quote Link to comment Share on other sites More sharing options...
Van Basten II Posted June 1, 2007 Report Share Posted June 1, 2007 Hooray ! Quote Link to comment Share on other sites More sharing options...
B. Clugston Posted June 1, 2007 Report Share Posted June 1, 2007 Those Mosaic, CD Universe and Downtown Music Gallery orders have never felt so good. Quote Link to comment Share on other sites More sharing options...
John Tapscott Posted June 1, 2007 Report Share Posted June 1, 2007 Yeah, feels great, doesn't it? Unfortunately the last time the Cdn$ got this high, a wicked recession followed about 3-4 years later, ('81-'83); the worst since the Depression. This is really not good news, IMHO, at least not this high. Our economy is not productive enough to sustain it. Quote Link to comment Share on other sites More sharing options...
Chuck Nessa Posted June 1, 2007 Report Share Posted June 1, 2007 Whatever! Still imitation dollars. Quote Link to comment Share on other sites More sharing options...
Jazzmoose Posted June 2, 2007 Report Share Posted June 2, 2007 What kind of country spends its loonies instead of electing them? Quote Link to comment Share on other sites More sharing options...
sidewinder Posted June 2, 2007 Report Share Posted June 2, 2007 Yeah, feels great, doesn't it? Unfortunately the last time the Cdn$ got this high, a wicked recession followed about 3-4 years later, ('81-'83); the worst since the Depression. This is really not good news, IMHO, at least not this high. Our economy is not productive enough to sustain it. And there was another one (at least in the East) around 90-91 when the loonie hit the $US 0.85-0.90 range. Quote Link to comment Share on other sites More sharing options...
The Magnificent Goldberg Posted June 2, 2007 Report Share Posted June 2, 2007 Surely, this time, it's not the strength of the Canadian economy, but the fucked-up-ness of the US economy that's causing the exchange rate movement? Why the hell do you call the Can$ a "loonie"? MG Quote Link to comment Share on other sites More sharing options...
sidewinder Posted June 2, 2007 Report Share Posted June 2, 2007 (edited) Why the hell do you call the Can$ a "loonie"? There's that prehistoric lake bird, the Loon, on one side of it. One of the typical sights of Canada. Her Maj. is on the other side ! Edited June 2, 2007 by sidewinder Quote Link to comment Share on other sites More sharing options...
The Magnificent Goldberg Posted June 2, 2007 Report Share Posted June 2, 2007 Why the hell do you call the Can$ a "loonie"? There's that prehistoric lake bird, the Loon, on one side of it. One of the typical sights of Canada. Thanks sidewinder. MG Quote Link to comment Share on other sites More sharing options...
sidewinder Posted June 2, 2007 Report Share Posted June 2, 2007 No problem ! I remember seeing those things on canoe trips up to the wilds of Algonquin and Temagami. A very eerie noise they make too. Quote Link to comment Share on other sites More sharing options...
Van Basten II Posted June 2, 2007 Report Share Posted June 2, 2007 What kind of country spends its loonies instead of electing them? We do both, nowadays. Quote Link to comment Share on other sites More sharing options...
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