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Oil and the Canadian dollar


I will be the first to admit I am not an economist, nor an expert in macro or micro economics. I did take those courses in University but that's where it ended. I've also been interested in the markets since I was a young lad, reading the Globe and Mail Report on Business beside my dad, at the kitchen table over breakfast, from my early days in high-school. I even started a stock investment club, and called it STING, Student Investment Group. We bought Bralorne Resources...and and got STUNG! So I'm no stock picker!

So anyways the other day I see a graph that charts the Canadian dollar to the price of oil. The two lines were almost identical. In other words one predicts the other. Which one? Really? You have to ask?

We might even be able to stretch ourselves and say any benefits our country receives from a lower dollar (more exports) are lost due to the reduced revenue for our oil industry and similarly when oil is high, revenues are high but our exporting industries are hurt by the high Canadian dollar.

So my message here is it doesn't matter what the prognosticators say about where the Canadian dollar is going, I know exactly where it's going, the same place the price of oil is going. No I can't predict that but next time someone goes on about the dollar and it's future and how it will affect your next trip to Florida or Vegas, or what the Bank of Canada might do, you can intelligently tell them there are no other factors...it's just the price of oil. It's no coincidence that oil was at record highs recently and low and behold the Canadian dollar was on par with the US greenback for the first time in over 40 years.

So if you know anyone from Saudi Arabia, let me know, they can probably predict it better than anyone!

And for what it's worth, that's just my opinion!


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