USD at 1.27 today. The sky is falling

Reef Pilot · #1 02-01-2015, 04:09 PM

Well, there are quite a few reasons for our low loonie, as has been discussed. But the latest straw was when our central banker, Polaz, dropped our interest rates by a 1/4 percent, while the US fed reaffirmed their intentions to raise them in the 2nd qtr (don't think it will happen, though, personally).

In Canada we are under the false hope that with our lower loonie our manufacturing industries will once again flourish. I don't think that will happen, as our labor costs are too high (as compared to Alabama and Georgia, not to mention China) and many of our raw materials are based on USD. Last time we needed a 65 cent loonie, now we probably will need a 40 cent loonie to make it work. And then we are also up against the Buy America First program.

So, we are in for some tough times in Canada, not just in Alberta, but also Ontario and Quebec... Adapt or perish, as they say...

Aqua-Digital · #2 02-01-2015, 04:46 PM

Quote:

Originally Posted by Reef Pilot

Adapt or perish, as they say...

Agreed, we are now looking more towards Europe for new product lines, the Euro/vs CAD is fairly stable in the mid range. Its still trading on interbank around the low 1.40's where we have structures in place to cater for anything up to 1.70 as seen only a few years ago.

Reef Pilot · #3 02-01-2015, 04:54 PM

Quote:

Originally Posted by Aqua-Digital

Agreed, we are now looking more towards Europe for new product lines, the Euro/vs CAD is fairly stable in the mid range. Its still trading on interbank around the low 1.40's where we have structures in place to cater for anything up to 1.70 as seen only a few years ago.

And the Euro could drop a lot further, as they start up their QE (printing money) program, not to mention what will happen with Greece, and maybe Spain and Italy.

Aqua-Digital · #4 02-01-2015, 05:01 PM

True, I am working Q2 pricing now for 1.35 I dont think the CAD has the strength to go much lower.

One that is hard to predict and is causing me headaches whether to get a futures on is the GBP, with a general election round the corner and so much on it riding on an entry exit from Europe, it really could go either way. Futures are great on the ascending but a Butt kick on the opposing.

Rice Reef · #5 02-01-2015, 05:07 PM

Quote:

Originally Posted by Reef Pilot

And the Euro could drop a lot further, as they start up their QE (printing money) program, not to mention what will happen with Greece, and maybe Spain and Italy.

Yes, where the Cdn dollar was not so affected was against the Euro. Canada will try to change its focus to the European market but I doubt it.

Reef Pilot · #6 02-01-2015, 05:44 PM

Quote:

Originally Posted by Rice Reef

Yes, where the Cdn dollar was not so affected was against the Euro. Canada will try to change its focus to the European market but I doubt it.

Well, they have been working hard and long on a free trade agreement with the EU. Still not final, but that could help.

I think we also need to focus more on China, and Asia in general. Big market there, and they do want things that we have, and I don't just mean oil. But domestically, we have to make the most of what we do have and can do, and stop trying to artificially support failing industries.

I was in retail (big box) all my career, and it is unbelievable the hoops and regulations you now need to go through to build or remodel a store. What used to take 2 or 3 years (from plans to completion) now takes 5 - 7 years, and what used to cost 2 - 4 million, now costs 5 -7, and more. This is over a span of just 10 years. With all the govt fingers (municipal are the worst, then provincial) involved, with all their assessments, consultations, and delays, it is making it very, very difficult to do business in Canada. Only the guys with very deep pockets and very long strategic time frames (like Walmart, Costco, etc) can survive. Cdn companies are at a huge disadvantage, caused by their own govts.

Sorry for the rant..., but I had to live this for the last part of my career,... and have very strong opinions here.

Reef Supplies · #7 07-25-2015, 02:08 PM

Oy :-(

http://www.ctvnews.ca/business/how-l...pert-1.2486200

Doug · #8 07-25-2015, 05:01 PM

Sucks for our imported equipment

Rice Reef · #9 02-01-2015, 05:03 PM

Quote:

Originally Posted by Reef Pilot

Well, there are quite a few reasons for our low loonie, as has been discussed. But the latest straw was when our central banker, Polaz, dropped our interest rates by a 1/4 percent, while the US fed reaffirmed their intentions to raise them in the 2nd qtr (don't think it will happen, though, personally).

In Canada we are under the false hope that with our lower loonie our manufacturing industries will once again flourish. I don't think that will happen, as our labor costs are too high (as compared to Alabama and Georgia, not to mention China) and many of our raw materials are based on USD. Last time we needed a 65 cent loonie, now we probably will need a 40 cent loonie to make it work. And then we are also up against the Buy America First program.

So, we are in for some tough times in Canada, not just in Alberta, but also Ontario and Quebec... Adapt or perish, as they say...

Agree. When we drop rates it is another way of printing money. When this was announced the Feds had also signalled that they were raising rates which is a way of slowing down spending and is also a way of strengthening currency.

Reef Pilot · #10 02-01-2015, 05:09 PM

Quote:

Originally Posted by Rice Reef

which is a way of slowing down spending

Private sector spending that is... Yeah, it's a vicious circle. Means even less market for our goods down there.

Only good news is that our lumber industry in BC will get a much needed big boost (Quebec, too). Certainly can't count on anything happening with our LNG hopes, at least not anytime soon...