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Canadian Dollar peaked?

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  • #16
    Re: Canadian Dollar peaked?

    Originally posted by jk View Post
    in general, demand for necessities will hold up better than for discretionary consumption. but even so, won't total demand diminish even for "necessities" in a global consumption-led recession? oil prices will remain relatively high, so consumers with pinched pocketbooks will turn down their thermostats and drive less. part of increased food demand has derived from rising incomes in asia leading to increased demand for meat. with falling incomes, diets will likely tend to become more vegetable-based again, with a leveraged effect on prices. [it takes about 8 units of vegetable food to produce 1 unit of animal product. thus there is a leveraged effect on demand for vegetable-based food as diets change in either direction.]

    thus, i would expect a recession to temper demand even for necessities. although their prices might remain high relative to their historical levels, surely those prices will be at least somewhat lower in the context of recession than in the context of prosperity. i don't see oil dropping back to $30, but surely it could drop to $70-80, or even 60. do you not think so?
    I am sticking with my oft repeated view that in the short term oil prices could go anywhere. So your outcome is well within the range

    However, the cost of purchasing "needs" (including energy) is measurably lower for citizens of countries with appreciating fiat currencies (against the US $) so recession tempered demand for necessities may not be as great as experienced in the "normal" post war recession pattern.

    I speculate a bit about how much protein demand increase (so far) has been driven by a big shift from vegetable to meat based proteins.

    A dietary shift to meat certainly requires increased income, but I observe dominant cultural norms and traditional eating patterns/food preparation and cooking habits that seem to me more influential than income (I will freely admit that our North American fast food influenced living habits may be the exception to this ;) ).

    Even vegetable based diets are influenced by this. One example; NW India has traditionally grown wheat and used it to make the staple steam leavened whole wheat bread. The advent of electrification and irrigation brought much land into rice production. 30 years on, few of the families eat much rice, preferring their traditional bread. The rice is an export cash crop. My sense is that from Italy to Indonesia generation after generation prepare and serve traditional (and familiar) national and local cuisine. Travelling with my Arab partners as far afield as London, Geneva and the south of France I was amazed at the lengths they would go to in order to find a top class Middle East restaurant that served mezza and the traditional and familiar dishes from back home.

    In the same way all across developing Asia I wonder if consumption of, say, pork in China will increase not because people are substituting pork for vegetables, but because people are eating more pork with vegetables in traditional dishes. Also religious considerations (against eating pork or beef or any red meats for example) are another factor to consider.

    I find it ironic that in the midst of what the media is calling a global "food crisis", the Canadian government is paying hog producers to reduce their breeding herds at a time of low prices. The one good thing that will come out of this program is a short term boost of pork supplies to food banks. In the longer run the price of pork for Canadians (and others who may be following the same path) is going up, and that, as you say, is bound to force a reduction of consumption of it.
    Cull Breeding Swine Program

    On February 25, 2008, the Canadian government announced a $50 million program designed to reduce the Canadian hog breeding herd by up to 10% over and above normal annual culling. The funding could effectively remove 150,000 breeding animals from the Canadian herd. If such a reduction in the breeding herd is reached, this would reduce annual hog production by approximately 3 million pigs, or 10% of production.

    Purpose of the Cull Breeding Swine Program
    • To facilitate the cull of breeding swine in Canada
    • To assist hog producers in their attempts to manage through the current market situation of low hog prices, high feed grain costs and a strong Canadian dollar

    Last edited by GRG55; 05-26-08, 10:04 PM.


    • #17
      Re: Canadian Dollar peaked?

      my understanding is that meat is relatively cheap now. because feed costs are so high, herds are being culled rapidly, bringing a lot of meat to market. this will lead to higher prices later, of course.


      • #18
        Re: Canadian Dollar peaked?

        Originally posted by NFN_NLN View Post
        If commodities have peaked then the Canadian dollar has peaked too? The analysts are predicting a decline into 2009.

        It may have already started:

        "Canadian Economy In Trouble

        While the whole world is worried about the slowdown in the US, Canada has to deal with a shocker in its backyard today. For the first time in almost 5 years, Canada’s economy contracted in the first quarter. Its GDP shrank an annualized 0.3% (0.4% gain expected) in January through March following an 0.8% growth in the fourth quarter. On a quarterly basis, GDP fell 0.1% after growing 0.2% previously.

        This data is unexpected, and compared with the 0.9% gain in the US economy in 1Q, it seems even more unreal. Vehicles and parts production were the hardest hit, accounting for 40% of the fall in manufacturing. The Canadian dollar immediately fell against the US dollar after the news release. We think that the Bank of Canada may be forced to cut interest rates again next month."


        • #19
          Re: Canadian Dollar peaked?

          Originally posted by GRG55 View Post
          I am sure Rogers is much wealthier than I, at least monetarily. And although I like to understand the thinking of people like Rogers (although not as old as Buffett or Templeton, I regard him as one of the grizzled old market veteran clan) I never assume they are going to be "right". They are human just like the rest of us, even though they are rich. And as EJ has noted, we may be in a period unlike any the US has ever experienced before, so conventional unconventional thinking won't do (I'm starting to sound like Rumsfeld).

          You may recall that I posted some time ago (in answer to one of your questions in a post I believe) that I thought the Swissie would get to par with the US $ (and the Yen would probably go to 80). Well the Swissie is almost there, and I didn't see a need to get greedy given the UBS and CS balance sheet situations.

          I truly believe that Switzerland now has a big problem, much bigger than anyone expected given the previously sterling reputation of Swiss bankers. And maybe much bigger than many are yet willing to acknowledge. They may be forced to trash their currency, perhaps not against the US $ but against the Euro.

          Just in case there was any remaining doubt...
          Swiss Franc Drops by Record Versus Euro as SNB Lowers Key Rate

          March 12 (Bloomberg) -- The Swiss franc fell by a record against the euro after the country’s central bank cut interest rates and said it began intervening to weaken the currency.

          The Swiss National Bank cut its three-month Libor target rate a quarter-point to 0.25 percent, in line with the median forecast of 15 economists surveyed by Bloomberg News. The SNB also said it will buy corporate bonds in its first solo intervention in foreign-exchange markets since 1992.

          “The big move in the franc was driven by the SNB’s massive quantitative-easing program,” Kathy Lien, director of currency research at GFT, an online currency-trading firm in New York, wrote in a client note. “This should be the beginning of further losses in the franc.”

          The franc fell as much as 3.4 percent to 1.5304 per euro...The losses pushed its decline versus its common European counterpart to 2 percent this year.

          Switzerland’s franc also declined 3.8 percent to a three- month low of 1.1967 against the dollar...


          • #20
            Re: Canadian Dollar peaked?

            GRG - A Swiss banking advisor did his level best to convince me to park my funds in Euros / Swiss francs, short of the US dollar. He had me swayed for about a week, then I did my own hard thinking, stuffed my ears full of wax like Odysseus sailing past the Sirens, and placed all my cash into USD while countenancing no further arguments. I'm up close to 10% in a matter of weeks against the EURO and Swiss Franc with 65% of my net assets. The toughest thing in the world is to find your inner core of conviction and realise you have better intel than a Swiss banker's advice. This banker (whose business it is presumably to know something as elementary as which currencies to park in) now has egg all over his face on this call today. I knew that I knew better, I just didn't trust myself. Fortunately I learned to trust my own instinct.



            • #21
              Re: Canadian Dollar peaked?

              "Race to the bottom" continues...

              Loonie continues to fall on interest rate expectations

              CBC News
              Posted: Oct 25, 2013 11:05 AM ET
              Last Updated: Oct 25, 2013 1:15 PM ET

              The Canadian dollar has fallen for the third straight day against the U.S. dollar, after the Bank of Canada moved Wednesday to lower expectations of an interest rate hike.

              The loonie fell one-quarter of a cent to 95.70 cents US in early afternoon trading, a seven-week low, and is down a cent and a half so far this week.

              On Wednesday, Bank of Canada governor Stephen Poloz indicated the bank is not expecting to raise rates any time soon, and that a cut to interest rates may be just as likely if economic conditions do not improve.

              The bank also lowered its outlook for Canadian growth for the next three years, as Canadian exports have yet to pick up.

              Andrew Pyle, senior wealth adviser and portfolio manager at Scotia McLeod, said he believes the loonie could hit 90 cents US by the end of the year.

              Pyle noted Poloz's background as the head of Export Development Canada as another sign the bank wants to do what it can to lower the dollar and boost exports...