interest rate decision in canada
 

later today, expected to go up 0.25%. will this help our exchange rate?

Re: interest rate decision in canada
 

Unlikley as this has already been factored into future market appraisals. But if there is talk of further rises to cool a hot market then I was told the pound would suffer further as after all rates are going up due to profit - not spiralling personal debt as was the UK's case.

Canada is the only G8 country to have a cash surplus for the last 8 years.

All in all there is no good news coming out of the UK whatever crap is mentioned by Nerdish property people talking the market up. Bottom line is prices are falling on property. Last weeks rally was based on a fasle promise and will be short lived. We are fast approaching the normal slowdown period anyway as far as the UK is concerened.

Nowhere I have read has there been talk of a Cad/Pound rally back to the days of 2.15 and up. The flow up and down is between 2.02 and 2.10. Several months ago it was between 2.20 and 2.12. There is a pattern forming and its a downward spiral. Late 2006 might be better. But I doubt it.

And I bet growth in the UK will be much less than the dire 1.6 predicted, and it will not change just like that as the government predict....unless everyone in the UK is stupid and goes out to Max their credit cards this Xmas....

mmmmmm.....
(bet they do!)

Re: interest rate decision in canada
 

Really, the only hope for Sterling in the long run is to start raising interest rates along with the rest of the world, and Brown isn't likely to do that when he has his sights set on number 10. He'd rather cause a depression in two years than a recesssion before he's out of number 11.

However, the price of oil should drop off somewhat after the hurricane season is over, which should drop the Canadian dollar. If we're real lucky :).

Re: interest rate decision in canada
 

If by that you mean the GBP vs CAD rate then very likely the answer will be no.

By raising the I.R. the Canadian dollar will be come even more attractive to investors and therefore more valuable vs GBP.

It's about time Gordon Brown's cronies at the BoE started doing likewise. If they don't then the GBP could slide.

Re: interest rate decision in canada
 

i kind of agree with you (thats a first i think!), but i can't get my head straight on how it works. if rates increase to strengthen the £ (they are already loads higher than most countries) then with the masses of consumer debt which we've all aready got, mortgages in particular the risk of another massive recession is very likely surely?

Re: interest rate decision in canada
 

In the longer term (e.g. next year) if the US economy tanks (high oil costs, cost of Katrina etc etc) then will it drag Canada down too? Or is Canada's economy as an oil producer too strong?

I got 2.071 yesterday when I bit the bullet and transferred around half my sterling to Canada. I'm holding on for >2.10 pref. 2.15 for the rest. Dont absolutely need it here until some point next year.

Oh for those halycon days of $2.30 to the GBP!

Re: interest rate decision in canada
 

Almost certainly. At least in recent months, when the dollar dropped against the pound, the Canadian dollar generally did too unless the price of oil was going up.

The only reason I'm not transferring all my remaining savings (i.e. my ISA) is because I'm hoping that oil prices will drop off for a bit and the US dollar will sink further next year and pull the Canadian dollar down with it.

Re: interest rate decision in canada
 

Brown doesn't choose the interest rates thats down to the Bank of England. If interest rates go up the pound will became stronger (maybe) but a very slow housing market will get even slower :( . Catch 22 me thinks.

Oil prices may drop depends on how cold a winter we have.

Re: interest rate decision in canada
 

Brown (directly or indirectly) decides who votes at the BoE. Brown decides what their inflation mandate is. Brown decides what inflation measure they use.

The BoE voters are about as independent of Brown as my big toe is independent of me.

Re: interest rate decision in canada
 

Think of currencies as bank accounts.

Foreign investors (ones who are investing just in the currency, rather than, say deciding where to build a factory) will choose the one with the highest interest rate so that they get the best return on their money.

If more people want to buy the pound (for example) then the price goes up, just as it would for any product that's in demand. The fact that the higher interest rates also make life more difficult for people living in the country and paying off loans, and may lead to a recession, is a(n almost) separate issue - it won't affect the external investors who are buying up the currency.

However, the rise in rates ---> stronger currency, which in turn ---> fewer exports (the exchange rate means prices are effectively higher for people buying goods) ---> fewer jobs making things for export ---> higher unemployment + higher debt repayments = likely recession.

Re: interest rate decision in canada
 

Yes.