Investing

Where is the Canadian dollar headed long term?

  • Last Updated:
  • Sep 11th, 2017 3:16 pm
[OP]
Deal Addict
Oct 4, 2006
1723 posts
423 upvotes
Toronto

Where is the Canadian dollar headed long term?

Obviously, no one has a crystal ball, but would you say this recent climb to 80-81 cents a temporary blip?

I'm holding a fair amount of American funds so it's not been so good lately. Probably should have Norbit-ed when it was at 69 cents.
But, it's looks like I'm holding on until the loonie takes a dive.
26 replies
Jr. Member
Feb 11, 2016
145 posts
165 upvotes
You answered your own question. No one knows , including you.

Allocate your currency based on your spending expectations or investing plan. Don't gamble on currency movement.
Deal Addict
Jul 27, 2017
2044 posts
839 upvotes
GTA
Agree with post #2

My person take is to keep everything in the currency of the country that you spend most of your time

If you want to speculate on currency, why limit yourself to $US, why not the Euro, Swiss Franc (chf) or the Russian Ruble (rub)
Member
Oct 27, 2014
478 posts
507 upvotes
Toronto, ON
porticoman wrote: Agree with post #2

My person take is to keep everything in the currency of the country that you spend most of your time

If you want to speculate on currency, why limit yourself to $US, why not the Euro, Swiss Franc (chf) or the Russian Ruble (rub)
OP probably holds lots of US-based assets such as stocks and etfs. In the long run currency doesn't have a major impact on your return, over 20 to 30 years your investment will go up by several hundred percent, and the currency normally fluctuate only by plus minus 20%. If you are still in the buying phase, lower US currency is beneficial for you since your Canadian dollars can get you more US assets.
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Apr 23, 2009
1732 posts
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Or maybe Zimbabwe dollars....you can turn into instant billionaire with only a small investment. And that you can do without Norbert's gambitFace With Tears Of Joy
porticoman wrote: Agree with post #2

My person take is to keep everything in the currency of the country that you spend most of your time

If you want to speculate on currency, why limit yourself to $US, why not the Euro, Swiss Franc (chf) or the Russian Ruble (rub)
Deal Fanatic
User avatar
Oct 9, 2008
5553 posts
2056 upvotes
Thornhill
muppetslayer wrote: OP probably holds lots of US-based assets such as stocks and etfs. In the long run currency doesn't have a major impact on your return, over 20 to 30 years your investment will go up by several hundred percent, and the currency normally fluctuate only by plus minus 20%. If you are still in the buying phase, lower US currency is beneficial for you since your Canadian dollars can get you more US assets.
This is a good answer to you OP if you're focused on long-term.

However, if you want to hedge against USD/CAD in the short-term , iShares Barclays 20+ Yr Treas.Bond (ETF)(NASDAQ:TLT) is a good product.
Deal Addict
Nov 9, 2013
3337 posts
2545 upvotes
Edmonton, AB
In the long term, hopefully into my bank account. I guess we'll see.
Sr. Member
User avatar
Oct 19, 2016
649 posts
202 upvotes
Toronto
Its very hard to guess, but I'd say USD will get stronger than CAD over the next few months - 1 year. Currently its at 1.237
Deal Addict
Oct 6, 2015
2411 posts
1311 upvotes
To $1.50 USD$ eventually. As the circumstances that drove it down to 63 cents in late 1990s/early 2000s (depression in the Canadian resource sector, and a bubble in the US economy) completely invert themselves.

These things are cyclical, but the cycles can be *very* long.
Deal Fanatic
Nov 24, 2013
5869 posts
2528 upvotes
Kingston, ON
"Long term" I think is impossible to peg. In ~45(?) years we've gone from par to $0.60 to par+ back to $0.69 (briefly) before climbing back up to $0.81. Who knows where on the long cycle you'll fall if you guess "long term."

For near-medium term,
Tailwinds - strong Canadian GDP growth aided by strong US GDP and employment, low dollar, and trade
Headwinds - continued low resource prices, lasting longer than originally hoped, with regionalized impact; NAFTA talks and US administration could be disruptive to the strong trade
Deal Addict
Oct 6, 2015
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$1 = $1 was quite typical until the US de-pegged from the gold standard in the 1970s:

Image
Deal Addict
Jan 20, 2016
2028 posts
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Houston, TX
burnt69 wrote: $1 = $1 was quite typical until the US de-pegged from the gold standard in the 1970s:

Image
The average since then was 0.85 USD/CAD or 1.2 CAD/USD. Right now we're ~ on the mean. It could go both ways. Imo short term CAD will strength +10% (rate hike in CAN, maybe stay put on US, oil going edging higher), in long-term it will stay 1.2-1.25 CAD/USD with +-10% imo

For myself I use 1.25 CAD/USD for long-term calculations
Make the face great again
Deal Addict
Aug 17, 2008
3179 posts
2210 upvotes
The question should be where are relative interest rates going? Macro (bond) funds use the 5Y5Y as their guide and as the trade of choice.

Look back to most of 2014 and you can use that as a reference to where we are today post rate hike. Question is Poloz done for now?

Here's a weekly chart snapshot, https://invst.ly/517yn

Edit/update below
Spread COB July 7 was 47.5bps

Legend;
Cda 5Y yield in red
UST 5Y yield in blue
USDCAD in purple
Deal Fanatic
Oct 7, 2007
5867 posts
2243 upvotes
The two biggest factors that appear to affect our dollar are:
1. Price of oil
2. BoC rate

Price of oil is anticipated to stay low for years to come but who knows what will happen to these artificially low interest rates over time.

I think if you were looking at converting to CAD, I would suggest doing small amounts over time so that you effectively "dollar cost average" your conversion.

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