Will Canada Save the Loonie?

The loonie goes up and Canadians are divided into two groups. Those who rush the US border to get in some early holiday shopping, and those who panic and wait for our economy to stall completely.

Lately, the loonie has been showing signs of dropping in relation to the American greenback, but analysts and financial gurus are still administering warnings of the peril to our economy should the Canadian dollar stay strong. Predictions about the future of the loonie have ranged to parity with the US dollar to a dramatic drop if our government intervenes. Meanwhile, the average Canadian is still going to work, to the gas station, to the grocery store and still paying the same prices for just about everything.

While the loonie enjoys time on a roller coaster ride, our paycheques and expenses see no difference. Are we in trouble? Is the fuss and drama about the loonie warranted? Should we open US money accounts and just enjoy the ride, or start a petition demanding our country’s leaders bring our dollar down? (I know what you’re thinking, open the account first, and then start the petition.)

Can Canada save the loonie from despair? Yes, of-course. But – only if it’s necessary. This is not the first time we have seen the Canadian dollar rise to dramatic levels. In the natural course of our economy, the dollar takes dips and rises on a regular basis. It’s only when it approaches the high end of the American dollar that the experts get worked up.

With global investors showing more interest in Canada, the loonie is being driven up by demand. Unfortunately, other aspects of our economy suffer, since it makes Canadian products more expensive and therefore less appealing. Currently the government has no plans to take dramatic actions against the rise of the dollar, since history has shown us that the loonie tends to come back down naturally.

To keep perspective, there are a couple things that accelerated the increase in the loonie. The Australians took the plunge and increased their key interest rate, leading to global money gurus to speculate Canada would follow, causing a flurry of interest in Canadian money markets.

The American economy is suffering yet more employment losses and remains unstable, which weakens their dollar globally. Since the weight of our dollar is measured against the greenback, we got a little better, while the States got a little worse. Canadian government intervention certainly will not strengthen the American economy, so at this point it’s a little premature.

The nature of all things financial, ultimately falls prey to humanity. Prior to the Bank of Canada’s key rate announcement, we saw the loonie on the rise, as so-called experts insisted the Canadian rate would go up. Bank of Canada stood fast keeping the key rate at .25 percent, and wouldn’t you know it, the loonie started creeping back down again.

Every action by every person has a consequence. Good or bad, the force of our economy and our dollar lies in the hands of people who think they know what to do in any given situation. The global recession was brought about by well-educated leaders of corporations and institutions who took risks assuming there would be a big pay off.

The truth is, it’s too early for our government to take charge of the dollar. Prudent Canadian tradition dictates we will wait until the storm of activity passes before we start the cleanup effort. We are not waiting to see whether the feds will take action, rather, we are waiting to see if they will need to.

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Jupiter, Fla. (PRWEB) January 13, 2008

Jack Crooks takes a closer look at the poor U.S. economy and dollar and comparatively considers the possibility of the British pound following in the dollar’s footsteps for 2008. Mr. Crooks examines the similarities between the dollar and the pound.

The housing market in the United States is collapsing. The evidence of an economic slowdown is already piled high, and the jobs report on January 11 was the final straw. Before that, analysts had been reluctant to forecast a full-blown recession because U.S. employment remained solid. But a dismal pace of new payrolls and a heated uptick in unemployment has made it clear just how bad things have gotten in the labor market.

So, is a U.S. recession largely factored into the currency markets? After all, investors were betting heavily against the dollar in 2007. The question is not if, but rather how much the next interest rate cut will be. And aggressive action from the Fed could drive the dollar to new lows.

Ben Bernanke, in his prepared speech on January 10, signaled that the Federal Reserve will cut interest rates further to aid ongoing economic weak spots. Currencies responded in the way expected; they rallied sharply against the U.S. dollar. But there was one notable exception: the British pound barely budged.

Will currency investors batter the pound as much as they killed the dollar last year? At first, that sounds absurd. That’s because we’ve become used to watching the two currencies trade against each other rather than in tandem.

But when taking a closer look at what’s happening in the U.K., the idea of a falling dollar and a falling pound makes more sense. At a time when the dollar story is getting stale, it’s easy for analysts and investors to simply transpose much of the negative U.S. dollar story right onto the British pound.

Look at the fundamentals:

    U.K. house prices fell 0.8% in the fourth quarter.
    Retail sales rose only 0.3% in December.
    Core prices in the U.K. are at the lowest level in 13 months.
    The savings ratio among Britons has dropped below zero for the first time since the late 1980s.
    And household debt service makes up a whopping 14% of incomes.

Those point to downside ahead, for both the U.K. economy and the pound. The British pound fell to an all-time low against the euro and more than a ten-month low versus the U.S. dollar this week.

“It’s obvious the U.K.’s central bank is starting to face the same demands that pushed the Federal Reserve to begin its series of interest rate cuts. What matters now is how soon the Bank of England succumbs to evidence of a weakening U.K. economy,” Mr. Crooks states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1356

About JACK CROOKS & MONEY AND MARKETS     

John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research’s latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007.

Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis.

Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron’s, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC.

Mr. Crooks holds a bachelor’s degree in finance from Florida State University and a master’s in business administration from the University of North Texas.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

# # #

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Jupiter, Fla. (PRWEB) July 13, 2008

Jack Crooks discuses how New Zealand has historically had a strong economy and dollar but could soon be taking a shift in the other direction. Mr. Crooks takes a closer look at why New Zealand’s economy is softening.

New Zealand, known primarily for its agricultural activity and natural resources, has been quietly living the good life. Meanwhile, the central bank’s benchmark interest rate has made investing in New Zealand rather attractive. Over the last several years, the New Zealand dollar has appreciated quite notably versus the U.S. dollar. But this trend could be set to change. Allen Bollard, one of the Reserve Bank of New Zealand’s (RBNZ) governors, recently expressed the need for rate cuts, citing the five signs of the softening New Zealand economy.

New Zealand’s first-quarter GDP contracted for the first time since 2005.
Export volumes slumped 3.5% in the same period.
For the month of May, home sales fell to their lowest levels in 16 years.
Retail sales in the first quarter fell at the fastest pace in 11 years.
And the labor market is showing signs of rolling over with unemployment jumping 0.2% in the first quarter.

Crooks believes that monetary conditions began to ease at the start of 2009 because the state of monetary policy has been a big driver of New Zealand dollar strength. The benchmark interest rate of the Reserve Bank of New Zealand sits at 8.25%. That’s comfortably higher than the Reserve Bank of Australia (7.25%), the Bank of England (5%) and the European Central Bank (4.25%). And it’s considerably higher than the Bank of Canada (3%), the Swiss National Bank (2.75%), the U.S. Federal Reserve (2%) and the Bank of Japan (0.5%). However, there are two things are happening that could quickly reverse this appeal.

First, interest rates at the RBNZ need to come down. If they don’t, policy makers risk cutting off New Zealand’s economy to an even greater extent. When rates start coming down on a relative basis, then capital begins fleeing.

Second, even if central bankers start cutting the RBNZ interest rate, they’ve got quite a ways to go before they reach the level of most other major central banks’ rates. That could mean the New Zealand dollar maintains a bit of interest rate appeal. But even more money will flee if risk aversion takes hold of the markets.

“When investors are comfortable taking risks, borrowed money typically flows into high-yielding investments. The New Zealand dollar, at 8.25%, is one such high-yielding asset. But when investors become fearful, they begin running for the exits. If and when risk-takers give in to their fears, money that’s been stashed away in New Zealand dollar assets could quickly be yanked away. The result being notable depreciation in the New Zealand dollar,” Crooks states.

To read this issue online, please visit:

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1956

About JACK CROOKS & MONEY AND MARKETS     

John (Jack) Crooks is the founder and president of Black Swan Capital, an independent advisory firm specializing in foreign exchange and currency markets investing for retail and institutional clients. A seasoned financial advisory with nearly 20 years of investment experience, Mr. Crooks uses both quantitative and qualitative approaches to determine the fundamental driving force(s) behind the movement of the currency, capital, and commodities markets. He is the editor of Weiss Research’s latest investment offerings, World Currency Alert and World Currency Options, which were launched in August 2007.

Mr. Crooks also founded Ross International Asset Management, a discretionary money management firm specializing in global stock, bond, and currency asset management for retail clients. Previously, he was general manager of Plexus Trading, where he specialized in currency futures and commodities trading. During his successful career, Mr. Crooks served as chief currency and futures strategist of M2 Futures Inc., an investment boutique headquartered in Chicago, as well as vice president of Global Strategic Research for an international investment boutique, where he was responsible for providing daily advice and global strategy analysis.

Prior to entering the investment arena, Mr. Crooks held various corporate finance positions. He has written extensively on the subject of global currencies and international economics and has been published in Asian Times, Futures Magazine, Barron’s, Bloomberg, Dow Jones Newswire, and across many financial websites. He has also appeared on Bloomberg TV and CNBC.

Mr. Crooks holds a bachelor’s degree in finance from Florida State University and a master’s in business administration from the University of North Texas.

Money and Markets (www.moneyandmarkets.com) is a free daily investment newsletter from Dr. Martin Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Weiss Research, Inc. is located in Jupiter, Florida. For more information about our editors, or to set up an interview, please contact Jennifer Moran at 561-627-3300 or visit www.moneyandmarkets.com.

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Phillipsburg, NJ (PRWEB) May 31, 2007

Kitchen Magic Inc., the family-owned kitchen refacing company, has been awarded first place in the Facelift Category of Remodeling News Magazine’s annual Innovation in Construction Awards. “We are excited because our specialty is kitchen refacing,” said Marking Manager for Kitchen Magic, Linda Fennessy. “Refacing transforms a kitchen just like all-new cabinets.” She added, “No one can tell the difference in the final product, but the customer knows that they saved about 50 percent of what they would have spent on replacement cabinetry.”

Kitchen Magic was founded in Allentown, Pennsylvania, in 1979 by Jost and Reine Fleck. Today Kitchen Magic continues to be family owned and operated and is the largest specialty refacer in the Northeast, serving PA, NJ, NY, CT, MA and RI. Kitchen Magic’s headquarters and manufacturing operations are located in Phillipsburg, NJ, and the ‘Kitchen Magic family’ is now comprised of over 250 employees.

Kitchen Magic hopes that this award will help focus attention on the fact that homeowners have an alternative to spending a small fortune to renovate their kitchen. “Our craftsmanship and quality product is really what makes the difference in any kitchen, whether it’s refacing or all-new,” said Kitchen Magic President, Brett Bacho. He added, “The challenge has always been getting that message across.” To reinforce their emphasis on quality and craftsmanship, Kitchen Magic offers a Lifetime of Home Ownership Warranty on their refacing products,” said Bacho.

As a recognized authority and a well respected publication in the home remodeling industry, Remodeling News is committed to recognizing remodeling trends that pave the way for the remodeling industry. The ‘Facelift’ Award is one of four kitchen categories included in their annual Innovation in Construction Awards.

Utilizing Kitchen Magic’s patented double-lamination process, the winning kitchen’s existing cabinets were refaced in Hard Rock Maple, an exclusive Kitchen Magic color. Brand new matching doors and drawers were added, creating the new style in a contemporary yet warm wood tone.

When considering a kitchen remodeling project and the future of the environment, refacing is an ideal solution. The process boasts two strong ‘green’ benefits — economy of the dollar and environmental efficiency. Refacing maximizes the value of a dollar to achieve the desired design and style at a tremendous cost savings. In addition, because it utilizes the existing cabinets, fewer materials, resources and energy are consumed and far less waste ends up in landfills, making refacing the most eco-friendly of remodeling options.

Fennessy stated, “We feel that the time has come where the benefits and economy of refacing, is being more widely embraced. The Remodeling News Award helps maintain that focus and direction.”

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Question by Sitizen X: is there anyone in here that wants to huff and puff about our “Booming” economy?
This is intended for the rightsters in here that so adamantly for the last year or two have called me every name in there limited book for asking the question..
“what will we do when the dollar is at parity with the Canadian Dollar”
now the CD is at a .30 margin above the dollar, pretty soon I’ll start asking the question about the Peso…

SO let’s here it ..how strong is the economy?????????
sorry Steve… when Bill left we had a surplus…
or did you forget that, or maybe you never knew??
Yes devaluation is an absolute sign that the economy is trouble…………
alright Skip… I’ll hand it to you ,… but they think they’re rightsters and do you call them for their non-conservativeness when they are sitting beside you at church?

Best answer:

Answer by You are all, weirdos.
Is deflation on an international level a definitive sign of a poor economy?

I don’t think it is. We’ve been hearing a lot of news about the economy doing well internally. I don’t think one piece of info is determinative.

Add your own answer in the comments!

The Fed Effect – Impacting The Value Of Currencies And Assets Across The World

Fed speak seems to impact the value of currencies and assets across the world! With the US economy continuing to be sluggish, the US Fed seems to be all set to take further measures to stimulate the US economy. The Fed seems to be in the mood to undertake quantitative easing by purchasing government paper. Quantitative easing is likely to lead to an increase in the money supply in the economy. More money chasing less goods or the same number of goods will put an upward pressure on prices. This measure is likely to reduce the chances of deflation setting in, something that has been haunting the US economy for some time. Pumping in more money into the economy is also likely to put a downward pressure on interest rates, which can help grease the wheels of the economy by making loans for investments and other purposes cheaper.

The Fed’s move though aimed at propping the US economy is impacting the values of currencies and other assets across the globe. The quantitative easing and an increase in the money supply means the value of the US dollar vis-à-vis other currencies should drop. The same would be true as the US interest rates ease. On the other hand, lower interest rates should fuel investment and galvanize the US economy. This should increase demand in the US economy and as the US is the largest importer in the world, production in other parts of the world should receive a boost.

The Fed announcement seems to have had exactly the same effect. The Canadian dollar strengthened against the US dollar and came close to parity. The Euro and the Yen also strengthened against the greenback. At the same time the Toronto Stock Exchange moved up led by commodity stocks on the expectation of increasing demand from the US. There was a twin effect here, with the commodity prices firming up due to a weaker US dollar and the expectation that the demand for commodities would increase due to the fresh stimulus in the US, both of which affected prices of commodity stocks. Similar was the effect on the Tokyo Stock Exchange, with select stocks including that of commodities and car makers strengthening.

The Fed’s move to stimulate the economy is in the face of expectations that it could slip back into recession if left to itself. The move of quantitative easing also implies that the Fed is signaling a weaker dollar regime. A weaker dollar should make exports from the US cheaper and prop the US industry. However, a massive quantitative easing program could make it difficult for the US to reverse the process quickly, once the economy picks up, and is likely to result in a subdued US dollar in the medium term. As and when the US economy picks up and the US Fed starts to reverse its monetary policy stance and sucks out liquidity from the economy the dollar should begin to stabilize and move upwards. However, how quickly this will happen is an answer that has been elusive, with the US economy remaining sluggish for an elongated period of time. Hopefully, an early turnaround in the economy should bring cheer to the dollar and the global economy in general.

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Question by Jorma NO HighDef Cams in inzone?: Does Our Dollar(USA) still hold a value that is “real” or even “Respectful”?
I know that currency or the “Paper Dollar”, only holds its value, based on gold or other physical resources(That we own). That are accepted by the world economies and governments.

But with the way our government spends money. It seems like there is an endless amount? I’m starting to think there lying to us about the debt. Or they have no idea what there doing.

I mean, where is all this money coming from? It certainly can’t be from our tax dollars!

Best answer:

Answer by Joel R
You are wrong in thinking that our dollar is tied to gold, or anything else for that matter.

It’s fiat currency, it’s only valuable because the govt says it is. They can print as much as they want, but too many dollars chasing too few goods will lead to inflation. We’re about to experience some major inflation having spent a few trillion dollars in just a few months.

Add your own answer in the comments!

Question by Mrs. Mustang: What does the term a “Weak US Dollar” actually mean?
I’ve heard the term used over and over again in the past few months to describe the situation in the US.

I know a weak US dollar implies a weak economy, but I’d like to know exactly what the term means, and how it is possible for a dollar to be “weak”.

What causes this? If someone could explain I would be very grateful.

Best answer:

Answer by clinician
A weak dollar is worth less compared to other currencies. It happens when persistently more money is printed by the government than is destroyed by the government. If a country has more dollars floating around, all those dollars will therefore be worth less. The government does this in order to lower interest rates and briefly stimulate the economy.

Add your own answer in the comments!