Canadian Dollar Continues Strong

The Canadian Dollar continues strong as the US Dollar falls out of favor against just about all currencies. Very early Monday morning in the US and at the start of the trading week in Europe the Canadian Dollar is trading at nearly 104.00 against the US Dollar.

Since the US Federal Reserve Bank bailed out the US stock market on September 18th with a 50 basis point cut in both the discount and the federal funds rate the US Dollar has come under increasing pressure in foreign exchange markets. After the nearly 367.00 point drop in the Dow this past Friday the “Bernanke Put” effort to save his Wall Street friends looks to be misguided.

A long list of challenges to equity values seems to be finally making stock investors concerned enough to start bailing out of stocks. With crude oil trading at about $90 a barrel, the sub prime mortgage market fallout becoming more servere, financial institution’s earnings under severe pressure, and soaring credit card debt coupled with record mortgage foreclosures, who can blame them?

The Fed is now in a really tough place. With the US Dollar under severe selling pressure a further cut in US interest rates will only accelerate the Dollar’s demise. It appears that the economy and stock market are about to buckle under the onslaught of bad news and disappointing corporate earnings which will only make market conditions more difficult for the Dollar.

Like the mess in Iraq there is no good or easy way out. Look for the US Dollar to continue to fall and for the currencies of prudent resource rich countries, like Canadian Dollars, to continue to gain strength.

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