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USD/CAD remains depressed below mid-1.2600s

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Re: USD/CAD remains depressed below mid-1.2600s

Unread postby Outcast_Searcher » Sun 12 Sep 2021, 02:33:24

gegepink wrote:USD/CAD remains depressed below mid-1.2600s, Canadian jobs data awaited

The USD/CAD pair traded with a mild negative bias heading into the European session and was last seen hovering near daily lows, just below mid-1.2600s.

Why is the short term status of the USD/CAD worth a thread topic?

More broadly, re the USD:

Despite the nearly constant and endless bleating re the demise of the USD by the usual fast crash doomer crowd for decades now, looking at the DXY:

https://www.tradingview.com/symbols/TVC-DXY/

The USD is up for the summer. It's about flat for the past year. It's close enough to flat for the past 10 years and the past 30 years not to be worth arguing about. It's close enough to the middle of the long term trading range not to be worth arguing about.

The doomer crowd may as well spend time yelling at clouds. It would be just as credible, but they'd get some fresh air.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: USD/CAD remains depressed below mid-1.2600s

Unread postby evilgenius » Sun 12 Sep 2021, 07:58:24

It isn't just the doomer crowd who are interested in where the dollar is. But, yeah, they don't have faith in what has stood. They want to invite people into their personal lives. Being right about a falling dollar is one way, I guess. There are easier ways, but I'm guessing those haven't gone so well.

But where the dollar is has an impact upon whether exporters from the US to other countries benefit. Contrary to what many believe, the US does make a lot of stuff. Some of it gets sold overseas, or to the south. Everything south of the US is heavily dependent upon what the dollar is doing. As far as those things go, I've always heard that the worst sorts of changes are changes that happen too fast. It's ok if the dollar moves ten cents against the euro, as long as it doesn't do it overnight. It's best if companies can make purchasing decisions and see the raw materials through to production without some huge price change disrupting things either way. That kind of slow speed.

I guess OP is Canadian? Sorry if I offended you by not saying the US also sold stuff to the north. It's just that in comparison to not only Mexico, but all of the land south of it too, it wouldn't be fair to force the reader's attention away. Canada is big and all, but it isn't that big. Rest assured, though, nobody hates you. Plus, the comparison points out something about the dollar, the gravity of it, that most people don't even think about. Those who think that flippant decisions can so easily be made that do away with something like the dollar don't realize what sorts of realignments would take place in diverse places. There was an experiment recently with Bitcoin in El Salvador. It touched upon this.
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Re: USD/CAD remains depressed below mid-1.2600s

Unread postby Outcast_Searcher » Sun 12 Sep 2021, 13:04:49

evilgenius wrote:It isn't just the doomer crowd who are interested in where the dollar is. But, yeah, they don't have faith in what has stood. They want to invite people into their personal lives. Being right about a falling dollar is one way, I guess. There are easier ways, but I'm guessing those haven't gone so well.

But where the dollar is has an impact upon whether exporters from the US to other countries benefit. Contrary to what many believe, the US does make a lot of stuff. Some of it gets sold overseas, or to the south. Everything south of the US is heavily dependent upon what the dollar is doing. As far as those things go, I've always heard that the worst sorts of changes are changes that happen too fast. It's ok if the dollar moves ten cents against the euro, as long as it doesn't do it overnight. It's best if companies can make purchasing decisions and see the raw materials through to production without some huge price change disrupting things either way. That kind of slow speed.

All good points.

I was thinking more in terms about the specific USD vs. CAD in the short run, vs. interest in the USD (or any major currency) in the long run.

Even as a teenager, I would be amused to see how whether the dollar was rising or falling, someone was complaining about it. A strong USD tends to be hard on emerging market economies, so emerging markets generally don't like that. A weak dollar lowers US purchasing power, so naturally lots of people don't like the inflationary and cost of living impacts of that. Trade and trade trends are huge economic impacts over time, though most people don't think about them often, including me.

And absolutely right on the pace of change issue. When things move gradually, it's easy to adapt. When things move fast, it can be really nasty to people locked into contracts, for example, unless one is fortunate enough to have made the right hedges ahead of time. Little wonder that commodities contracts have become so popular for business hedges, or that the FX exchanges do over $5 trillion in volume a day on average.

Looking at a long term DXY chart vs. a long term WTI chart, crude makes the USD appear VERY tame since 1973 when things got "interesting" in the Middle East re global oil supplies.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: USD/CAD remains depressed below mid-1.2600s

Unread postby evilgenius » Tue 14 Sep 2021, 06:11:51

I too find what happens with hedging very interesting. All of those predictions that are made about the future. How that market deals with the outcomes. It is always somebody's turn. If you didn't hedge rightly, it isn't yours. So much of that is luck. Because we are people, we tend to think it had more skill to it. But it isn't like there is no skill.
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Re: USD/CAD remains depressed below mid-1.2600s

Unread postby Outcast_Searcher » Sun 19 Sep 2021, 18:23:19

evilgenius wrote:I too find what happens with hedging very interesting. All of those predictions that are made about the future. How that market deals with the outcomes. It is always somebody's turn. If you didn't hedge rightly, it isn't yours. So much of that is luck. Because we are people, we tend to think it had more skill to it. But it isn't like there is no skill.

Or "skill" could be just being risk adverse when risk gets massive. One doesn't need to hedge 100% of risk to be aware that hedging truly massive risks against huge moves is prudent for industries like, say, oil production gold mining, or something as mundane as even cattle or wheat farming.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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