Nov. 8, 2007
The futures market in currency has puts substantially exceeding calls for the Canadian dollar in the coming months. Since a put is an option to sell the currency it seems that the US and global traders have decided the Canadian dollar is somewhat overvalued at over par values.Already the dollar has declined from 1.10 to just over 1.01 in a few days. This is good news for Canadian exporters. On the other hand tonight's Democratic party debate in Las Vegas once again revealed that the leading Democratic party candidates for President are sharply critical of NAFTA and some of them seek its abrogation or at least renegotiation.
In some instances what they are calling for, greater protection for social rights and the environment makes eminent sense.
But overall if the Democrats win as they seem to be poised to do now it will put considerable pressure on Canada having hopefully adjusted to the high exchange rate on the dollar to rethink its overall trade strategy with the US. Canadian strategic interests including the future of our energy rich resources sector will be on the line so we will have to be both creative and determined.
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