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Last Year the Commodities Crash Killed the Canadian dollar. This Year it\u2019s the U.S. Economic Crash that\u2019s Killing Them!<\/strong><\/p>\n \n So that was what hurt them much of last year. Now we roll into 2009, and they get killed by another dynamic: the increasing slowdown of the U.S. economy!<\/p>\n \n For three months in a row now, the U.S. economy has shed around 600,000 jobs or more back to back! The unemployment rate seems to be going somewhat parabolic at this point. It jumped from 7.6% previously to 8.1% now.<\/p>\n \n On top of this, to buffer the blow of the slowdown, Canada\u2019s central bank had to lower interest rates once again (to 0.50%) which put it at the lowest their interest rates have EVER been!<\/p>\n \n While this is a dynamic that will eventually be good for their economy, it hurts their currency right now for sure.<\/p>\n \n They also stated that they may implore \u201cQuantitative Easing\u201d. What the heck is that? Well, in simple terms it means that they will print money out of thin air and load up the banks with so much excess cash that they are more likely to lend money and thus spur economic growth.<\/p>\n \n While that may eventually give their economy a boost, it kills their currency. Why? Look at it this way. Anytime something becomes more abundant, it becomes worth less. Anytime something becomes scarce, it becomes more valuable. (This is why a Corvette in the 1960\u2019s may have gone for $3,000 then and would sell for $30,000 to $60,000 today. These days, they are scarce\u2026yet they weren\u2019t back then).<\/p>\n \n So when the market is flooded with more money (Canadian dollars), that money gets devalued and is worth less. Therefore it takes more (Canadian) dollars to buy the same amount of goods.<\/p>\n \n The U.S. is Printing Money too, but Right Now they are Saved Because they are the World\u2019s Reserve Currency (and thus a \u201cSafe Haven\u201d).<\/strong><\/p>\n <\/strong><\/p>\n Now, you may say but isn\u2019t the U.S. doing the same thing? After all, their economy is slowing down. They are printing money too.<\/p>\n \n I would say, while I won\u2019t deny that point, the U.S. dollar presently benefits from what is called the \u201csafe haven bid\u201d. What does that mean? It means that investors all over the globe are running to the safety of the U.S. dollar because it\u2019s the world\u2019s reserve currency right now.<\/p>\n \n In other words, if there\u2019s one currency on the face of the earth that you are most likely to keep and continue to use, it\u2019s the one that most of the goods are priced in all over the world. For example, gold, oil, wheat, soybeans, lumber, etc. are all priced in U.S. dollars.<\/p>\n \n Therefore in crazy times like this, it enjoys the benefit of being the world\u2019s reserve currency. However, once the global economy finally does return to normal, then this \u201cbenefit\u201d will suddenly go away and the dollar will just have to stand on its own fundamentals once again. We all know that once that happens, the buck doesn\u2019t have that much to stand on. Therefore, the \u201cdollar party\u201d may come to an end ONCE the global economy normalizes.<\/p>\n \n In the mean time, Canada\u2019s currency (and economy) will continue to suffer as the U.S. lays off more workers and continues to slow down. Remember, they derive about 79% of their exports from the U.S. That\u2019s huge! In fact, it\u2019s so huge\u2026it\u2019s the largest trading relationship between two countries according to Canada\u2019s trade department.<\/p>\n \n This really is huge, because the U.S. hasn\u2019t had three back to back months of layoffs this big since they started keeping records on it back in 1939. So from at least as far as our records go back, this has never happened on this scale before!<\/p>\n \n So when you add all of this up, you come up with the fact that the U.S. dollar has a high probability of continuing to rise against the Canadian dollar. So with that said, I think you may find the USD\/CAD rate to break the 1.30 barrier in the coming weeks to months. <\/strong><\/p>\n <\/strong><\/p>\n Therefore, if you would like to take advantage of this situation and profit from the pressure on the Canadian dollar, then take these three steps:<\/p>\n \n \n \n \n Bonus:<\/strong> See where to invest NOW, even in these tough economic times by clicking here.<\/a><\/p>\n \n Sean Hyman<\/p>\n Head Course Instructor<\/p>\n http:\/\/www.mywealth.com<\/p>\n","protected":false},"excerpt":{"rendered":" Have you ever seen someone make a mistake and not only do they suffer for it but someone else does as a result also? Well, this is exactly what\u2019s happening to Canada right now. You see, most of last year, you could say that the Canadian dollar was falling because of falling commodity prices. Since … <\/p>\n\n
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