And now it is the Greenback's turn...

Beware of The Strong Canadian Dollar

I have been saying for years that Canada is far too dependent on United States as a trading partner and we are about get hit hard because of this. The U.S economy is tanking and Canada will not be able to take the hit.

Nation	November 05 2007 value over November 5 2006 Value	November 05 2007 value over November 5 2006 Value expressed as a percentage
US	1.07010/.88540	120.86%
Japan	122.8070/104.5360	117.48%
China	7.9890/6.97870	114.48%
European Union	0.73740/0.69650	105.87%

That 20.86% increase in value scares me. There is no way the Canadian GDP has increased that much over the last 12 months and i fear that even the 17.48% and 14.48% increases are related to the tanking U.S. economy. Both China and Japan, like Canada, are net exporters to the United States and as the values of our currencies rise so do the prices of our exports in the American market. Unless the value of our dollar falls to the $1.03 range before Christmas Canada is in for some serious economic hardship in the new year because if it rises to $1.10 (a 27% rise in 12 months) by Christmas I expect stagflation to occur, which could result in mass lay-offs starting as early as March due to surplus inventory because Canadian goods will have been priced out of the market in the United States.

Meanwhile our dollar may continue to rise on world markets as a haven currency but because of the unemployment only a handful of Canadians will be able to take advantage of the falling import prices.