Cdn Dollar Overvalued?

[errolanderson]

It appears that the U.S. government is
trying their darndest to cool the U.S.
dollar in an effort to stimulate exports
right now. This has contributed in-part
to the spot loonie surging above parity.

In my opinion (for what its worth), the
Cdn dollar now appears overvalued which
is contrary to some banker and financial
industry thinking. My take is that
commodities are now overall deflationary
(a market swear word). Albeit, cattle
and land prices do not fit this category
just yet. Canada's burgeoning personal
and government debt problems remain
largely off the global radar screen, but
not forever.

Believe loonie may be susceptible to a
swift pullback if equities suddenly
change course.

What are some opinions on this out
there?

Errol

[Cattleman]

I am sort of thinking the same thing. I thought our dollar would be safely below par for a while due to the problems in Europe. It almost feels like Europe is becoming old news, and people are willing to take a little more risk - just because. Hence Euro is up a bit, and US dollar index down. To me Europe still a mess - look at Greece, and Portugal is on a slimilar slope. These plays in the market are frustrating at times, but these markets are the market.

I think that shorter term we are in for some deflationary pressure, longer term could be another story.

[cottonpicken]

A small short term pull back maybe,medium term
rally to1.10 possible,long term up.

[Hopperbin]

Oil up 2 dollars
gold up 23
Silver up 57
And my advisor said to buy american dollars when we were at 98 cents.

[monte]

Who the hell knows what any currency is worth these days. Canada does not need it to go much higher to make it worth alot less than the USD.

[Hopperbin]

Just wondering how exactly does the US gov't try to cool the USA dollar? In most of our Canadian Liberal past we were buying our Canadian dollars to prop up our dollar to slow our economy.
From Sask. was not really sure why we needed to slow the economy down at the time.

[errolanderson]

There are again rumblings about more
U.S. Fed money printing (QE3) by
Bernanke. These rumblings actually
supported the Dow today. Flooding the
market with more U.S. dollars would
pressure the U.S. dollar at least for a
while.

Personally, feel this is not good long-
term policy for the U.S. as it could
create short-term gain with long-term
pain. Think Bernanke understands these
risks, but politics are likely talking.

U.S. is in a worsening and massive
financial mess despite recent employment
gains. Market bumps ahead seen . . . .

Errol

[rhoff]

I think more risk appetite among investors globally means money leaving U.S gov't debt and moving into riskier assets-which will likely mean Our dollar goes up.I think QE3 is off the table because of last weeks jobs report.

[errolanderson]

Last Friday's U.S. employment report
showing another drop in unemployment was
exceptionally squeaky clean. It is, what
it is. But the U.S. appears to be
forgetting to count an awful lot of
Americans that have given up looking for
work.

Unemployment is far higher than what the
U.S. government reports.

Errol

[cottonpicken]

I think its qe forever.

If you want a zero interest rate policy,who is going to
buy those bonds?

Who is going to fund the never ending deficits of the
federal government?

[crusher]

Its pretty difficult to predict the future, I don't think anyone has been able to do this successfully yet. There aren't too many times in history that the Can $$ is above par therefore I'm going to convert some Can$$ to US, enough to cover my travel costs and any other direct US purchases for the year.

On a side note, I'm a light seller of old crop canola (15%) as it appears we are hitting some resistance. I'm also selling old crop wheat into next fall because those charts are also showing some resistance. Plus I'm picking up about a 20% gross return. Doing a little extra work on the wheat will pretty much cover all my next year's winter holidays, and you guys know I'm gone half the winter.

[errolanderson]

Not sure Bernanke's money printing
program is very effective anymore. Think
he realizes this . . . Somewhere there
has to be global responsibility for
debt. Unfortunately, what has to happen
financially, nobody wants to hear.

Agree . . . like locking up the wheat
and guarding that canola right now.

For those with old crop, July $500 puts
traded at $5.50/MT today . . . just in
case the bottom falls out of this
market. USDA tomorrow morning . . . .

Errol