Investing

Where is the Canadian dollar headed long term?

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  • Sep 11th, 2017 3:16 pm
Deal Addict
Oct 4, 2006
3638 posts
3019 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
Member
Feb 11, 2016
254 posts
317 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
2180 posts
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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)
Sr. Member
Oct 27, 2014
560 posts
1078 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
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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)
Why do you want to climb Mt. Everest, Sir? - Because it is there.

— George Leigh Mallory
Deal Fanatic
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Oct 9, 2008
5684 posts
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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 Fanatic
Nov 9, 2013
5885 posts
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Edmonton, AB
In the long term, hopefully into my bank account. I guess we'll see.
Buy right, hold tight. Keep calm and go long.
Sr. Member
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Oct 19, 2016
650 posts
208 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
2463 posts
1401 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
6479 posts
3344 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
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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 Guru
Aug 17, 2008
10990 posts
13540 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
Answer not a fool according to his folly, lest thou also be like unto him = Never argue with an idiot, they'll only bring you down to their level & beat you with experience
Deal Fanatic
Oct 7, 2007
9404 posts
5374 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.
Deal Addict
Oct 6, 2015
2463 posts
1401 upvotes
asa1973 wrote: 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
Overshoot to the downside (ie: 63 cents) means overshoot to the upside. If $1 = $1 is the long-term 'pivot point', it means we could see 1/0.63 = $1.58 at some point.
Deal Addict
Oct 4, 2006
3638 posts
3019 upvotes
Toronto
muppetslayer wrote: OP probably holds lots of US-based assets such as stocks and etfs.
I simply have a US savings account that was set up to deposit funds from a contract I did for an American firm.
I had planned to convert as I rarely do work in the US.
The meteoric rise of the loonie is a bit of surprise and well, I suppose I'll convert on dips. That said, I'm not in any hurry, so perhaps yes, invest in some stocks or etfs.
Deal Expert
Jun 26, 2011
15096 posts
5413 upvotes
GTA
burnt69 wrote: 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.
$1.50 USD?

Not in my lifetime
Deal Addict
Dec 11, 2007
1958 posts
582 upvotes
Markham
I mean, never say never, but considering the range post-Bretton Woods is effectively 0.65 to 1.05 CAD/USD or 0.95 to 1.55 USD/CAD, I don't see how anyone can logically conclude the pivot is 1:1

Similar to a previous poster, I typically use 1.20 to 1.25 USD/CAD as the baseline.

Also, just want to point out, please be careful of the FX notation. Proper notation is the base currency FIRST. 1.25 CAD/USD means 1 CAD exchanges to 1.25 USD, not 1.25 CAD per USD as is being implied in some previous posts.
Deal Fanatic
Nov 24, 2013
6479 posts
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Kingston, ON
Cerenity wrote: I mean, never say never, but considering the range post-Bretton Woods is effectively 0.65 to 1.05 CAD/USD or 0.95 to 1.55 USD/CAD, I don't see how anyone can logically conclude the pivot is 1:1

Similar to a previous poster, I typically use 1.20 to 1.25 USD/CAD as the baseline.

Also, just want to point out, please be careful of the FX notation. Proper notation is the base currency FIRST. 1.25 CAD/USD means 1 CAD exchanges to 1.25 USD, not 1.25 CAD per USD as is being implied in some previous posts.
True, the FX notation USDCAD is indeed "1 USD in CAD," which would be ~$1.25, but I find putting the slash in there makes it confusing, acceptable notation or not. As above, laymen would use the slash to mean "per," as in USD per CAD, which is ~$0.80.

I'm just in favour of minimizing ambiguity.

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