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Old August 8th, 2008, 03:28 PM
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Default Dollar vs Euro

The dollar rose to a 5-month high against the Euro today, $1.50 to one Euro. At least it is a step in the right direction.

This, along with the price of oil dropping as low as $116/barrel, means that cruises (especially in Europe) could be more reasonable next year than they are this year.

Here is the interesting thing. Economists are saying that while the US has been close to a recession recently (definitely in a downturn) that signs are that we are moving out of it (this is tentative, these are unconfirmed signs, but at least they are signs) while Europe and other major economies may be just entering a downturn.

This should even things out in the U.S. if this trend continues, and we will be leading the way out of a global downturn putting us back in a position of strength in the global markets in the near future.

Hey, this is not a panacea for high gas prices and falling home values right now - but it is something to look forward to - and since economies generally rely on predicting the future, seeing light at the end of the tunnel actually brings you to the end of the tunnel more quickly.
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Old August 9th, 2008, 07:42 AM
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Paul, yes, good news. Of course, for those of us that hedged a bit (already transferred next month's rent into Yen), this is a bit of a loss. Still, I am looking forward to my money going farther overseas and to (hopefully) the decrease in fuel surcharges IF the prices stay down for a while; I don't expect fuel surcharges to disappear quickly as prices could shoot right back up as fast as they have come down.
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Old August 9th, 2008, 10:15 AM
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Default Re: Dollar vs Euro

Quote:
Originally Posted by Paul Motter
The dollar rose to a 5-month high against the Euro today, $1.50 to one Euro. At least it is a step in the right direction.

This, along with the price of oil dropping as low as $116/barrel, means that cruises (especially in Europe) could be more reasonable next year than they are this year.

Here is the interesting thing. Economists are saying that while the US has been close to a recession recently (definitely in a downturn) that signs are that we are moving out of it (this is tentative, these are unconfirmed signs, but at least they are signs) while Europe and other major economies may be just entering a downturn.

This should even things out in the U.S. if this trend continues, and we will be leading the way out of a global downturn putting us back in a position of strength in the global markets in the near future.

Hey, this is not a panacea for high gas prices and falling home values right now - but it is something to look forward to - and since economies generally rely on predicting the future, seeing light at the end of the tunnel actually brings you to the end of the tunnel more quickly.
I'll check back with you in six months and see how things are going. The dollar may gain strength against the Euro but I don't see a major change in the economy for at least eighteen months. I'm a bit more pessimistic and feel that things will become a little worse before they get better. We haven't see the full snowball effects on food, oil, job growth, layoffs and GNP.

I know it will turnaround but it will take some time and during that time I think there will be some hurt in the travel and leisure areas.

One thing that has come out of this is that we now know when American's will actually begin to do something about the economy. It's when gas reaches $4.00/gallon.

Take care,
Mike
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Old August 9th, 2008, 01:59 PM
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I really have a problem with how all other currencies have to bow down to the US currency. I make note of the Canadian Dollar. The economy is Canada, so they say, is slowing down, but in Ontario and Quebec only, not in Alberta, Saskatchewan, and Newfoundland--all three provinces are rich in oil reserves and supporting the rest of the country with out prosperity.

What irks me is the Canadian dollar rose with the price of oil and then stalled with oil hit a certain price. After that it stayed between 0.97 and 1.00 to one US dollar. As oil went up our dollar did NOT go up, as it did when oil prices went up. Accordingly, when oil hit $147 a barrel, the Candian dollar, according to one economist, should have been somewhere around $1.20-$1.30 (meaning a 70-80 cent US dollar), but NO, it did NOT go up, it stayed around 98-99 cent mark.

Now that oil is going down the dollar is going down, and it is ridiculous that it is going down when the dollar never actually went up when oil hit that mark the first time, it stayed at around 98-99 cent mark. Now it is down to 0.94, so 1.05 to buy $1 US...This not just happening to the Canadian dollar, it is also the Aussie dollar, Japan/South Korea, and other foreign currencies as well..

It peeves me off to know that the world is bowing down and letting the US have a higher currency value when the economies in the respective nations are still doing ok to good, but oh no, we have to let the US dollar be higher than ours or they'll be angry at us and not trade with us.....Your economy should not dictate how the other developed nations economies should be as well. If you say the Recession word it is almost as if everyone else should go into it too...NO! If we are doing well, good for us, and so you should say, but no.......

It puts a bump in my plans for holidays because now I have to factor is 10% less spending because of the lower dollar. I can only hope that the goverment wakes up and realizes that the dollar should have NOT gone down when oil started going down (unless it went below $100 a barrel). It is about time that Canada step up and become more powerful and have a dollar that is higher and stays higher....Yes, job are being lost, but we will always be the closest trading partner to the US because of proximity. No one can control the multinational corporations from closing down expensive Canada/US plants in favour of opening a plant in Mexico or some foreign location because the costs will be 50% less for everything from building, taxes, and wage or salaried employees (who would make up to 75% less than a Canadian/US worker and be DAMN happy to have the job).

Ok, my rant on how the US isn't everything is over....I just had to say it......
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Old August 10th, 2008, 08:21 AM
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Quote:
Originally Posted by misguidedangel
I really have a problem with how all other currencies have to bow down to the US currency.

Ok, my rant on how the US isn't everything is over....I just had to say it......
Learn to live with it. Canada has tremendous natual resources. However, the economy is more than these resources. Tthe economy is still critically tied to the US economy.
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Old August 10th, 2008, 03:36 PM
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No one can predict the economy and indicators always lag the true picture. I don't want to be all rosy, but I am saying there indicators out there that are encouraging.

Oil is down, commodity prices (copper, steel, coal, etc) have gone down, housing prices are down, interest rates are down. What we are suffering from is fear - mostly in the housing market. FUD is our enemy, but when things start to look better the effect is self-enforcing.

Speaking of hedging, Marc. I wonder if the cruise lines are losing money on oil futures thinking the price would lock in at $140/barrel? Wouldn't that be the pits? However, it serves a purpose to show how the economy works. If oil prices drop like this unexpectedly, it lowers the chances of anyone buying $140/barrel oil futures.

For many money professionals the sign of a bottom is when the most people are saying its going to get much worse. It is called contrarian thinking and an example is a well-known fact that anytime a certain company gets highlighted on the cover of Time Magazine as a "wonder company" their stock has hit already hit its high and goes down.

My point is that one of the best indicators of an economy changing direction is when the largest number of people are worried about it. This means the pain has hit critical mass and has maxed out.

Now, how soon and to what degree it recovers is a totally different story. I don't expect home prices to go back to 2005 levels, but I don't think they are falling another 30% as some people are predicting.

In any case - the economy is not based on current conditions, it is based on what people think it will be doing in six months. Things could get worse, but Fannie Mae just reported a loss four times bigger than people expected. Their stock had already dropped 90%. So the news was expected and it didn't drop that much more.

How much worse can it get? I think the pain is already factored in, which is a sign it could be turning around already (as oil prices and the dollar indicate).

As for Canada - they choose where the Canadian dollar goes, not the U.S.
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