By Colin Campbell - Wednesday, February 13, 2013 - 0 Comments
For five years now, the loonie has been at par with the U.S. dollar, but for a small deviation in 2009. And for all that time, Canadian shoppers have paid more than Americans for the same goods—often more than 20 per cent more, in fact, according to various surveys. A new Senate report last week promised to get to the bottom of this shake-down. What it offered were the same excuses used by retailers: we are a small, less competitive country with border restrictions and geographic challenges that drive up prices.
But is Canada really such an undesirable place to do business? Consumers here are richer on average than Americans, more likely to be employed and far more willing to go into debt to buy things. In the U.S., credit card debt rose just 0.1 per cent in December, while consumer debt just hit a new high in Canada. We are, if anything, a retailer’s dream. Our willingness to buy stuff is part of the rea- son Target and J. Crew are expanding here.
There are a few reasons to explain slight price differences. It costs something to print up French labels. It costs money to transport goods here (but that’s greatly overstated in a country where most people live next to the U.S. border). None of it explains the hefty markups on everything from appliances to cars, some of which are made in Canada.
When the loonie first hit par, retailers and manufacturers said it would take time to adjust. Some have matched prices, proving it can be done profitably. So what’s the real reason for the price gap? It can only be that Canadians are willing to pay more, perhaps because our economy has performed better than America’s. Retailers are charging what the market will bear. And until shoppers take their business elsewhere, i.e., across the border, that won’t change.
By Econowatch - Wednesday, August 22, 2012 at 12:01 PM - 0 Comments
Bank of Canada governor Mark Carney was the first Canadian central banker to speak in front of the country’s auto workers today. Here’s the text of the speech he delivered to the Canadian Auto Workers union’s annual conference in Toronto:
By Gabriela Perdomo - Friday, March 2, 2012 at 2:38 PM - 0 Comments
Canada’s ambassador to Iceland Alan Bones will announce tomorrow that Canada is ready to…
Canada’s ambassador to Iceland Alan Bones will announce tomorrow that Canada is ready to discuss Iceland’s potential adoption of the loonie as its currency, The Globe and Mail reports:
Iceland, still reeling from the aftershocks of the devastating collapse of its banks in 2008, is looking longingly to the loonie as the salvation from wild economic gyrations and suffocating capital controls.
(…) A group of prominent Icelandic business leaders approached Mr. Bones last year about the idea. And his speech Saturday, to a meeting of the opposition Progressive Party, marks Canada’s first public response.
While Iceland would seem to have many reasons to adopt the loonie and ditch the volatile krona, Canada could also benefit. As both the Globe article and this piece by Canadian Business point out, part of the reason Canada might be open to talks with Iceland is because their adoption of the loonie would create a partnership with an Arctic nation. From Canadian Business:
The strangest reason for adopting the loonie is Arctic sovereignty. There are eight countries in the Arctic Council, including Canada and Iceland. A common currency could help Canada gain clout in the council, the group argues, and it could gain even more if Greenland comes on board, which they recommend.
Plus, let’s face it, we’re flattered by the attention.
By macleans.ca - Tuesday, July 26, 2011 at 12:13 PM - 0 Comments
Debt-ceiling negations push Canadian dollar up
The Canadian dollar hit a three-year high Tuesday, climbing over 106 cents U.S. as worries over debt ceiling negotiations continued to plague the greenback. U.S. Lawmakers have so far failed to reach a deal to extend that country’s $14.3 trillion debt limit. They have until August 2 to come up with an agreement or the U.S. may default on loan obligations. The loonie reached 106.24 cents US, up 0.51 of a cent, in early trading Tuesday, it’s highest level since November 2007.
By macleans.ca - Wednesday, April 20, 2011 at 1:31 PM - 13 Comments
Canadian dollar hits three-and-a-half year high
The Canadian dollar soared to a three-and-a-half year high against the U.S. dollar on Wednesday, briefly reaching US$1.0529, a level not seen since November 2007. Market watchers say high commodity prices and above-forecast inflation figures in Canada are behind the loonie’s surge. A larger-than-expected rise in Canada’s consumer price data released on Tuesday prompted expectations that the Bank of Canada would hike-up interest rates in July. But the Canadian dollar was down against most other G10 currencies, leading one analyst to tell Reuters that the exchange rate move reflects an independently weaker U.S. greenback, rather than a strengthening Canadian dollar.
By macleans.ca - Friday, December 31, 2010 at 2:32 PM - 7 Comments
Rising commodity prices boost Canadian dollar
The Canadian dollar closed out 2010 higher than the greenback, finishing the year at 100.54 cents U.S. The figure represents a 5.6 per cent gain over the past 12 months and is the loonie’s highest closing value since May 2008. The Canadian dollar’s rise was largely due to an increase in oil prices and a spike in the price of copper, while its U.S. counterpart fell on strong economic data that prompted investors to take on more risk.
By Jason Kirby - Thursday, November 5, 2009 at 12:00 PM - 4 Comments
With the dollar near parity, are we getting gouged again?
Last week marked the second anniversary of the Great Canadian Consumer Uprising. When the loonie surged 18 per cent in the first 10 months of 2007 it exposed huge price gaps between Canadian and U.S. retailers. In some cases, even with the dollar at par, Canadians were paying 25 per cent more. Shoppers in this country, normally a docile lot, revolted en masse. Even Finance Minister Jim Flaherty weighed in, chastising stores for gouging consumers. Yet last week was remarkable in its own right. In the first 10 months of this year the loonie once again jumped 18 per cent, and like before, it’s laid bare some price gaps between Canadian and U.S. retailers. But the response from shoppers this time around? Meh.
The shifting mood highlights two crucial developments that will be key to determining how retailers fare this vital Christmas shopping season. On the one hand, stores have renegotiated with suppliers to bring down prices, helping them be more competitive with U.S. rivals. But at the same time, shoppers are simply no longer so gung-ho that they’d hop in the car and wait hours at the border to save a few bucks on books, jeans and TVs. The lack of outrage suggests consumers simply don’t care anymore, or at least, can’t afford to. With the economy in shambles, they’re not shopping in either the U.S. or Canada. And that poses an even greater threat than cross-border shopping did in 2007. Continue…
By Andrew Coyne - Friday, October 30, 2009 at 11:12 AM - 27 Comments
Even if the Canadian dollar were to mirror the U.S. in value, Andrew Coyne says that’s no reason for celebration
Once again the dollar is flirting with parity, and once again everyone is very excited about it. Why? Objectively, there is no more significance to the dollar being worth US100 cents than any other value, except that 100 is a nice, round number.
Yes, it means the Canadian dollar is worth as much as a U.S. dollar. But so what? The only reason anyone pays attention to this is because they have the same name. If we were to call our currency something else—I have long favoured “the pelt”—then the mere fact that on any given day, between one currency being worth more than the other and the reverse, their values happened momentarily to coincide would attract little notice. But because they are both called the dollar, it gives rise to the entirely occult belief that the two ought naturally to be at par, the approach of which is celebrated as if it were some kind of cosmic convergence. Continue…
By Steve Maich - Friday, October 16, 2009 at 8:30 AM - 1 Comment
A weekly scorecard on the state of the economy in North America and beyond
The Canadian economy has answered a lot of questions for us in the past few months. Our housing market stumbled, but didn’t go into free fall. Our mining, manufacturing and construction industries suffered, but did not collapse. Retail sales slowed, but you won’t see row upon row of boarded-up stores when you venture out holiday shopping next month. And, of course, it turns out our banks are a fair bit more solid than many gave them credit for.
All of that must qualify as welcome and somewhat surprising news, and the latest bit of encouragement came last week with the release of September jobs figures. As the kids headed back to school, the employment situation in the U.S. continued to worsen—another 263,000 jobs vapourized as the world’s largest economy searches for a way to staunch the bleeding. But in Canada, 31,000 jobs were created, a second straight month of improvement, far outpacing even the rosiest projections on Bay Street. Continue…
By Aaron Wherry - Tuesday, September 1, 2009 at 7:55 PM - 12 Comments
Canadian Press, August 26. The Bank of Canada is warning it is prepared to intervene to ensure Canada’s fragile economic recovery is not derailed by a resurgent loonie. With evidence mounting that the economy is emerging from a short but deep recession, deputy governor Timothy Lane cautioned Tuesday that the recovery is still uncertain and the loonie’s strength is worrying.
Globe and Mail, tonight. Political uncertainty could drive the Canadian dollar lower overnight following Opposition Leader Michael Ignatieff’s comment that the federal Liberals will no longer prop up the minority Conservative government, a leading currency strategist said Tuesday. “I think the impact of the political news is important, and creates some uncertainty, which is always a Canadian dollar negative,” Camilla Sutton, a currency strategist with the Bank of Nova Scotia, said in an interview.