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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (51320)6/30/2004 11:07:19 PM
From: Taikun  Read Replies (2) of 74559
 
Hello Jay, A few weeks ago I wrote about my concern for the Canadian Dollar in the wake of a minority gov't.

Message 20222006

As this article suggests, the resultant leftist minority gov't and the separatist tones in the West and Ouebec do not bode well for the Canadian Dollar. I suppose one could make the argument that the Loonie should be lower, since it has appreciated well of its lows of 60ish cents US to the mid seventies. Remember, though, that due to the commodities base of the Canadian economy, some pundits were predicting 80 cents to the Greenback by year end. That now seems unlikely. The Loonie would probably be back in the 60s if it were not for the resource base. I think, for now, that investors are taking a benign view to this new gov't, but recall that the leader of the Bloc has stated openly their interests in pursuing independence. The West will be right around the corner. As I said in this post, my stance is still bearish on the Loonie and CanRoys. The average term of a Canadian Minority gov't is 18mos, I would not be surprised to see an election called by year-end among deteriorating US relations, divergence between the parties on key issues and separatist vocality. The New Democrats are quite anti-oil patch with their environmental issues and also want to raise taxes (Chretien lowered the capital gains tax several years back-that could be reversed). The Bloc will push for a larger share for Quebec in oil revenues.

prudentbear.com
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