High Loonie boon to travelers to the US

However as the article also notes the high loonie will also hurt exporters. While travelers to the US will benefit so will Canadian consumers since the cost of imported goods should decline as our dollars will purchase more in other countries. This is from the Star.

A boon to March break travellers

Emily Mathieu

Canada's manufacturers and exporters are likely to feel the squeeze after the Canadian dollar crept closer to parity on Friday following stronger-than-expected employment numbers.

"It's much more doubtful whether the Canadian economy can really live with a currency quite that strong on an extended basis, at least not until commodity prices are a lot higher than they are today," said CIBC chief economist Avery Shenfeld.

"We have already wiped out some of the manufacturers and exporters that had a tough time competing with a strong exchange rate."

On Friday, Statistics Canada reported that 60,000 full-time positions were created in February, with gains in business, building and other support services, manufacturing, health care and social assistance. The gains were offset by a loss of 39,000 part-jobs the same month.

Following the labour report, the loonie touched a 20-month high, briefly tapping 98.47 cents (U.S.), the highest level since July 2008.

The currency closed at 98.20 cents, up 0.57 of a cent.

Matthew Strauss, senior currency strategist with RBC Capital Markets, said the Canadian dollar is expected to move to parity during the first half of 2010.

"It seems we might even get there before the end of the month."

For cross-border shoppers and Canadians going south for March break, the strong loonie means better deals. But, for Canada's exporters and manufacturers, finally showing signs of life after dismal job losses, the surge could have a significantly negative impact.

"The rising dollar is a major challenge for Canadian exporters," said economist Erin Weir, with the United Steelworkers union.

Earlier in March, the Bank of Canada said it would maintain its target for the overnight rate at 0.25 per cent and the bank rate would also remain unchanged at 0.50 per cent, with the deposit rate remaining static at 0.25 per cent. The bank said, conditional on the current rate of inflation, overnight rates are expected to hold until the end of the second quarter of 2010.

Strauss said the central bank is expected to raise rates fairly aggressively, but it is not clear at what pace.

With files from The Canadian Press

In Bishop's Robes, Jim Flaherty Meets the Retailers

This is from James Laxer's blog. Flaherty is a great purveyor of flatulence. His pompous hot air may have some minor effects but as Laxer says it doesn't really propel prices downward.

Tuesday, October 23, 2007
In Bishop’s Robes, Jim Flaherty Meets the Retailers

At a highly publicized meeting on Parliament Hill today, Finance Minister Jim Flaherty will exhort the nation’s retailers to bring prices into line with the stronger value of the Canadian dollar. The gathering bears a strong resemblance to a conclave of medieval warlords with the local bishop. From time to time the bishop would meet with knights, lords, knaves and other grandees to urge a little Christian charity on them.

Keep the pillaging, looting, mayhem, and theft from the local peasants to a minimum he would urge. Not only would this win points for them with the Almighty, it would do much to prevent the peasants from revolting. And the peasants are always revolting, he might add.

Naturally those present at the gathering understood that the bishop would take no earthly action to ensure compliance with his stated wishes. Moral suasion was the name of the game.

When Jim Flaherty meets with the Retail Council, Walmart and all the other marts, he is there to urge them to do the right thing. They should give Canadian consumers true value for their puissant loonies.

Like the medieval bishop, Flaherty is a man a principle, of fixed principles. He believes in the celestial workings of the unregulated market. Let the forces of supply and demand, of wages and profits operate like a finely tuned timepiece and all will be well. There will be no legislation to require retailers to treat Canadians fairly when they purchase automobiles, books, household appliances and clothing, the finance minister has already said.

Why bother to hold the meeting at all if Flaherty plans to take no action to ensure that Canadians get fairness?

As a man of his creed, the finance minister believes that words from the pulpit can have an effect. For their part, the retailers are grumbling. They don’t want to be seen at a confessional where they are cast in the role of the sinners. The price gap between Canada and the U.S. is someone else’s fault, they insist. Blame the manufacturers, the distributors, labour and the geography of Canada, just don’t blame them.

At the conclave, Flaherty will be sure to explain to the retailers that spending an hour or two wearing a hair shirt in a his presence and perhaps conceding a few alms to consumers is better than the alternative: a meeting at a future date with a political leader who might actually do something.