Buy loonies, sell greenbacks: HSBC
JOHN PARTRIDGE
Thursday, August 11, 2005
Europe's largest bank has put out an enthusiastic “buy” recommendation on the Canadian dollar, saying Canada's lumber, automotive and oil industries add up to a “fantastic story.”
HSBC Holdings PLC advised Thursday that investors bail out of the U.S. dollar and into its Canadian counterpart. “I can't remember a time when I felt so bullish on Canada,” David Bloom, director of currency strategy for HSBC, said when reached at the bank's headquarters in London.
“There's a housing boom in the U.S. and you [Canada] sell lumber. You sell cars and there's an autos boom in the U.S. And the other thing that's booming in the world is oil, and you sell 680,000 barrels a day. What more do you want?
“Everything at the moment you touch is gold,” he said.
The loonie was trading at 83.30 cents (U.S.) Wednesday morning, but Mr. Bloom figures it could climb to more than 84.60 cents and perhaps top 85 cents in short order. “Longer term, if the oil price were to remain up here, there's no stopping you,” he said.
He acknowledged that an even stronger Canadian dollar could “squeeze out” some Canadian manufacturers because it will make their prices less competitive. “That's the downside of the story,” he said.
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