It is interesting to see what is happening in the big world of major corporate finance. While in a normal time the filing for bankruptcy of GM would have been taken as a disaster in the strange new world of post collapse economics it gets interpreted as a good thing...in spite of the negative impact the whole process is having on government finances in both Canada and the US. The report below reflects some of this new thinking.
From a report by Citizens Bank (Canadian Chartered Bank).
NORTH AMERICAN: The Canadian dollar continued to move higher against the U.S dollar on Monday, hitting its highest level in nearly eight months as commodity prices surged on upbeat economic data from Europe and Asia. It is more of a U.S. dollar story as investors dumped the U.S. dollar after hoarding the currency during the worst of the global financial crisis. Investors have started to unload the currency because of continuing signs that the worst of the global recession may have passed, analyst said. Given the new month, a slew of economic data are due this week.
EUROPE and ASIA: The U.S dollar fell sharply on Monday, falling to its lowest level so far this year against the basket of currencies and the euro because optimism that the global economy is on the road to recovery is boosting riskier assets. Better than expected economic data from Euro zone and UK fuelled this notion and dented the U.S. dollar further. Highlight this morning: U.S. personal consumption for April, ISM manufacturing index. Euro/US expected range 1.4150-1.4250.
While I am not going to try to suggest I understand all of what is above, we can certainly see our buying power increasing as the Canadian dollar goes up...of course it could hurt our manufactured exports, but manufacturing has been hit so hard now will this cause any more problems? Or is it part of our adjusting to a new relationship based upon a higher dollar.
On the micro side I also see some positive traits as we see people simply getting on with their lives rather than being consumed by the negative economic story. Consumers are starting to become more comfortable with where things are and spending is going up in many areas. Even car purchases were up last month. Six months ago the sky was falling...today Chicken Little seems to have retreated and we can start looking forward to some sunnier weather...so do your bit and take a positive attitude and live like there is really a tomorrow...we can guarantee it will come.
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