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Originally Posted by corpse_grinder0
so I was talking to someone today, and aparently they said the reason the canadian dollar has been rising is the cost of oil. they said as oil prices increase so does the canadian dollar. is this true?
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Commodities are king right at the moment. Oil gold silver copper timber etc etc. Canada has tons of that stuff, lots of foreign companies are trying to get a piece of it so they need Canadian dollars to buy in, so the Canadian dollar goes up.
The US on the other hand is spending by borrowing money like a Democrat, war in Iraq, oil for SUV's and 500 hp cars, big screen TV's, toys with lead in them from China etc, etc. At the same time the FED is keeping interest rates low to stimulate the economy. Foreign investors are not as likely to want to own US dollars as they can't get much interest for their money plus the US dollar keeps dropping in value so the sell their dollars and buy Canadian dollars and Euros.
Foreign governments are also rethinking only having US dollars for their cash reserves. Some are going to a market basket, a little of everyones currency and maybe a little gold. So as they do this the US dollar falls and the more it falls the more people get rid of it further reducing the value. Wait till China decides it does not want any more US dollars. Look out, it could get really messy.
I'm figuring when we finally pull out of Iraq thats about when the stuff will hit the fan.