# Where is the U.S. Dollar Headed?



## crazyjackcsa (Aug 8, 2010)

I was looking for opinions. I normally don't hedge, or live in the world of forex but on occasion I think about it. 

In relation to the Canadian dollar, where do you see the exchange rate in the next 5-10 years?


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## Argonaut (Dec 7, 2010)

5-10 years is such a long period of time it could have a range anywhere from $.70 to $1.20. If you want $US exposure, best to invest in NYSE equities. That way you get dividends and likely capital appreciation while you wait to see what happens with the exchange.

Personally I think the ridiculous US debt has to catch up with it sometime, and the results could be disastrous for the greenback. But in the short-term it seems comfortable at a 1:1 ratio.


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## slacker (Mar 8, 2010)

I'm also concerned about the ridiculous debt level. How will it unwind? Controlled or catastrophic? Will USD remain the reserve currency? While there is significant downside to the USD, it's not clear that they will materialize within a 10 year timeframe.


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## Belguy (May 24, 2010)

Never bet against the USA when it comes to making investment decisions!!!


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## the-royal-mail (Dec 11, 2009)

Belguy said:


> Never bet against the USA when it comes to making investment decisions!!!


LOL - glad to see that famous belguy sense of humour.


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## Cal (Jun 17, 2009)

Belguy said:


> Never bet against the USA when it comes to making investment decisions!!!


Exactly. If they want their $ to depreciate, it will. If they want it to rise, it will. There is so much that could happen in the next 5-10 years...who knows. However in that period I am sure that there will be both buying and selling opportunities.


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## crazyjackcsa (Aug 8, 2010)

Alright, well that was far more advanced than I really needed! 

How about this, is anybody buying US dollars now in anticipation of a return to a 70 cent Canadian dollar.

I suppose its more of a frugality question. My wife often has the opportunity to purchase U.S. dollars at par, and when the dollar was at 85 cents that made for a good buy.

We've been sitting on the money with plans to take a big U.S trip in the next 5 years.

Now the dollar is at par (basically) and was wondering if we should continue, or not.


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## the-royal-mail (Dec 11, 2009)

Absolutely not. The US has printed trillions of play money. Their currency and economy are in terrible shape. I have no confidence in them at all. There are much better havens for money out there than this play money.


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## funinagg (Jun 10, 2010)

on a related note, what is the best way to trade/convert CAD/USD? i have an account with RBC Direct and will have one with TD Waterhouse soon. RBC Direct has tiered fee from 150 to 30 basis points while TD bank is at about 100 basis points and TD Waterhouse at about 200 basis points. at most an infrequent trader/converter, say 2-4 times a year, what are the options?


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## plen (Nov 18, 2010)

Goldman Sachs just changed their forecast for USD->CAD to 0.95 by the end of the year. They had previously forecast parity.

http://online.wsj.com/article/BT-CO-20110112-713204.html


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## jsut (Dec 14, 2010)

funinagg said:


> on a related note, what is the best way to trade/convert CAD/USD? i have an account with RBC Direct and will have one with TD Waterhouse soon. RBC Direct has tiered fee from 150 to 30 basis points while TD bank is at about 100 basis points and TD Waterhouse at about 200 basis points. at most an infrequent trader/converter, say 2-4 times a year, what are the options?


depending on the amount of money you're moving, you might consider http://fxglobaltransfer.oanda.com/ that'll give you a much better rate but there are different fee's involved. If you're not moving much money it doesn't make sense.


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## LondonHomes (Dec 29, 2010)

IMO the US economy has significant structural problems that their government is unequiped to address. Until the US economy turns around I cannot see that their dollar will recover.

However, because Canada is so tied into the US economy the CDN$ can only float so far above the US$ before the dollars strength hurts the Canadian economy.

So now that we are over parity, I'm calling a CDN$ in the range of 1 to 1.10 for awhile. With the only exception being another Greece / Irish financial crisis which causes investors to rush to the US$ as a reserve currency.


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## the-royal-mail (Dec 11, 2009)

LondonHomes said:


> ...With the only exception being another Greece / Irish financial crisis which causes investors to rush to the US$ as a reserve currency.


I agree with most of your other comments but this one stands out. The evidence suggests otherwise. I don't see a lot of confidence in US currency at all. It just keeps going down down down. It looks to me like the world reserve currency of choice is gold, silver, copper and other precious metals. The US has printed at least 2 trillion in play money and continues to worsen and people's lives are getting no better down there.


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## marina628 (Dec 14, 2010)

Well today I took my monthly paycheck and converted from USD to Cad , my net Canadian was $330 less than last month.I think CAD will get stronger so have been invoicing in CAD since Jan 1.I am sitting on $192,000USD in my business acct wondering if i should convert 6 months of payroll now at today's rate instead of losing another 2-5% down the road ,what do you guys think?Obviously I live in Canad so have to live on CAD .


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## plen (Nov 18, 2010)

marina628 said:


> Well today I took my monthly paycheck and converted from USD to Cad , my net Canadian was $330 less than last month.I think CAD will get stronger so have been invoicing in CAD since Jan 1.I am sitting on $192,000USD in my business acct wondering if i should convert 6 months of payroll now at today's rate instead of losing another 2-5% down the road ,what do you guys think?Obviously I live in Canad so have to live on CAD .


Who do you bank with or more appropriately what rate do you get for the exchange?


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## kcowan (Jul 1, 2010)

Yes the rate matters more than the timing!


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## atrp2biz (Sep 22, 2010)

kcowan said:


> Yes the rate matters more than the timing!


LOL.

Marina: Here is another approach to your dilemma.

At what rate would the FX have a material impact on sustainability of your business? To provide security, you could purchase a call option on a USD/CAD futures contract at a specific strike price (say 1.01 or at a rate that would impact the sustainability of the business--or any other rate you care to choose). A contract represents a notional value of USD$100,000. If the USD/CAD is 1.05 at option expiration, you could exercise your option and net (1.05-1.01) x 100,000 = $4,000. If the rate ends up below 1.01, you would still be able to benefit from a depreciating CAD. 

There is a premium (think insurance) associated with this approach, but it is another option to converting now or doing a series of conversions over the next six months. 

I just looked up the June 1.01 call. It is $0.0276, so it would cost $2760 for the option to at least get an FX rate of 1.01 USD/CAD (or lower) in June on the equivalent of $100,000.


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## marina628 (Dec 14, 2010)

We bank with TD Bank .The FX won't affect my business just my gut tells me that CAD is going to be higher than it is right now.Actually another wise poster told me last month to convert to CAD and use some cash to pay down my mortgage .I think maybe I should do that and my interest savings will offset the FX.The business owes me $100,000 from money I invested in past.December was exceptional for us so we will probably have another $50000 in account before January is over.I can only put down $60,000 on the mortgage .


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## humble_pie (Jun 7, 2009)

marina for the kinds of $$$ you keep talking about on this forum it seems like victimology 101 to be sitting there ready willing & able to pay the high bank or broker FX fees, and these on a frequent basis.

would it not be worth your while to learn how to convert your currencies at close to wholesale rates.

main options are gambitting or forex trading.

apart from its rrsp platform where gambitting works seamlessly, the tdw website is not an efficient environment in which to gambit in a non-registered account. Easier choices among online brokers are those built on the ADP mainframe system. BMO & i believe royal bank are among these.

another choice would be forex trading at Interactive brokers. The fees are unbelievably low. For 100k in a USD/CAD pair, for example, fees to exchange could be as low as a few dollars.


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## marina628 (Dec 14, 2010)

you guys may as well be speaking Chinese to me , way out of my comfort level ,post some links so i can read lol .It gets worst because these funds are in a business account right now.The lack of return is why I decided time for me to learn .Every month we get nearly $100,000 in USD and about half gets converted into CAD.We have 27 clients who pay us each month all overseas so multiple wires into the corporate bank acct.I figure I would post that bit in case you think i have a bag of cash and take it to TD lol.The fact it is paid to corporation means we have to deposit in the bank acct or A bank account for the business.


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## humble_pie (Jun 7, 2009)

och i've posted about the gambit til i'm blue in the face. Many have gambitted for years. We. Don't. Pay. FX. Fees. Ever.

CC picked it up & has recently described his own personal gambits in detail over on his blog.

right here in this forum a poster named avrex picked it up & has posted in detail about perfect olympic gold gambits that he recently carried out in his rrsp.

because there's nothing new under the sun, it turned out that another bunch of people were into gambitting a few years ago, mostly clustered around an individual named norbert - not kidding - so the strategy came to be called norbert's gambit. But in reality, thousands have done it successfully. I remember a senior tdw representative 10 or 12 years ago, long before norbert, telling me how many of his clients were doing the exact same option gambits that i was doing.

no, i'm not going to search for, prepare & post all the links for you. You'll have to do this research yourself. For someone who can play poker as well as you do, it should be a cinch. You could be glad the path is so well trodden and the way is so well lit for you.

i agree that a catch is that the funds are in your corporate accounts. This is indeed a challenge. Undoubtedly there is a workaround. Just ottomh it should be possible to open an institutional or business account, at least at Interactive Brokers, where it would be possible to conduct forex trading.

the fact that you are docilely paying 1-2% FX fees on more than half a million dollars per annum (half of 100k per month, you mentioned) totally freaks me out.


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## marina628 (Dec 14, 2010)

I have been paying these fees since 2005  gambit i thought was slang for something ,I googled it now .Pretty much been doing everything with TD bank .I know I am probably losing a small car a year via bank exchange fees lolfrom Sept 30,2009 -Sept 30 ,2010 we converted $1.3 Million USD to CAD transferring from USD acct to CAD acct via Canada Trust and paying whatever their fees were.


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## marina628 (Dec 14, 2010)

BTW when I joined the forum I said I needed help , just now realizing how badly !


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## Jungle (Feb 17, 2010)

If you have not found it already, a good Gambit thread can be found here:

http://www.financialwebring.org/forum/viewtopic.php?f=38&t=198


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## marina628 (Dec 14, 2010)

Thank Jungle been reading stuff online tonight ,will get this sorted out in next couple days.


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## atrp2biz (Sep 22, 2010)

What are the margin requirements to execute the NG with the short-side first (non-registered TDW account)? If the margin requirement for the short is 1.3X, would I require 1.3X + X = 2.3X in my account to then purchase the long side? Or would the 1.3X be sufficient?


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