Canadian Dollar as an 'indirect' USD strength play?

Roswell Crash Survivor

Roswell Crash Survivor

Well-Known Member
Silver Stacker
Just bouncing an half-baked idea around for a medium term strategy...

flag_canada.jpg


Buying Canadian dollars, or assets denominated in CAD to gain indirect exposure to the strengthening USD.

Australia's predominant export partner is China.

Canada's predominant export partner is the United States.

In the last 5 years, AUDCAD has mostly traded within a narrow range within 5 cents of parity.

1467_audcad_20150730.jpg


The CAD has endured an epic walloping against the USD lately.

1467_cadusd_20150730.jpg


Can one 'take refuge' in the CAD against the devaluing AUD as Chinese demand for Australian commodity exports soften?

I can also see the counter-arguments:
(b)CAD is highly exposed to crude oil and other commodity prices, especially lumber and wheat
(c)Canada is (thank the universe) not the USA

Like I said at the start, probably a half-baked hare-brained idea.

So, thoughts?
 
(b)CAD is highly exposed to crude oil and other commodity prices, especially lumber and wheat

This. CAD is also a 'commodity currency' hence its high correlation with AUD.
 
Have you considered Hong Kong Dollar? It's linked to the USD at a rate between US$1 to HK$7.75-7.85

You have a tightly linked currency to the USD as well as potential for a repegging to the RMB in the future (unlikely, but possible)
 
Ouch said:
Is there some reason you can/will not hold USD?
Click to expand...

neonuke said:
Have you considered Hong Kong Dollar? It's linked to the USD at a rate between US$1 to HK$7.75-7.85. You have a tightly linked currency to the USD as well as potential for a repegging to the RMB in the future (unlikely, but possible)
Click to expand...

Thanks for everyone's input.

As a matter of fact, I already operate accounts denominated in US Dollars and Hong Kong Dollars. I've decided the most reliable way to increase my USD exposure (and reduce my exposure to weakening AUD) is to extend my positions in those. Its loon-aucy to treat the Loonie (Canadian Dollar) as a cheap backdoor USD.

The HK Dollar is particularly interesting opportunity on a longer time horizon: its pegged to the reserve currency of today (US Dollars) while in a excellent position for closer ties to one of most important currencies of the future (Chinese Renminbei).
 
Roswell Crash Survivor said:
The HK Dollar is particularly interesting opportunity on a longer time horizon: its pegged to the reserve currency of today (US Dollars) while in a excellent position for closer ties to one of most important currencies of the future (Chinese Renminbei).
Click to expand...



Some say the BRICS bank/alliance will become the dominant economic power over the next 30 years. Is one able to buy shares or ETFs in BRICS bank as with other banks? I tried looking but couldn't find anything.
 
How about the Euro??

16449_euro_safe_during_dollar_collapse.jpg

16449_eurozone_gold_to_protect_currency.jpg


"This is a very strong defense play because you are getting twice the return from both the dollar's fall and the euro's rise."
-Rickards
 
JulieW said:
-j-p-shmorgan said:
How about the Euro??

http://forums.silverstackers.com/uploads/16449_euro_safe_during_dollar_collapse.jpg
http://forums.silverstackers.com/uploads/16449_eurozone_gold_to_protect_currency.jpg

"This is a very strong defense play because you are getting twice the return from both the dollar's fall and the euro's rise."
-Rickards
Click to expand...

Great idea if you're not using Australian dollars to buy them! lol
Click to expand...

I've been thinking about this move quite a bit actually.
I think it is indeed a very strong play.

Planning on swapping dollars for Euros once the dollar loses traction. :)
 
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