Thursday, March 12, 2009

At the Mercy of Exchange Rates

Contrary to some December news optimism, the CAD has not recovered yet.

The briefest explanation is that while oil is low the CAD remains low. Interestingly, though, the weakening is attributed to better retail sales than expected, including automobile sales pushing the USD higher. What is most consumption, and specifically automobile consumption, tied to directly or indirectly? Oil.

If oil recovery is delayed a few months, as the spec increases, maybe the CAD gains a little by the time I head abroad.

Oh Canada. Our currency, save for those bright days last summer, has always been the poor sister of the Western world. Only at peak oil did we hit parity for the first time in decades. All volatility is bad volatility, it appears, and because 2009 is expected to be generally bad everywhere it may still be a lean travel year for Canadiennes. Et alors.

"The greenback has weakened against every major currency except for the Canadian dollar."

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