Hello EUro

OPEC has been seriously considering moving to a euro backed petroleum industry, as opposed to US dollar backed, and there are numerous valid economic reasons for a [potential] shift.

As the dollar's rate of exchange continues to fall against the world's major currencies, there has been much speculation about the likely knock-on effect. One area receiving a lot of attention is crude oil in general, and OPEC in particular.
It has been suggested that OPEC may begin pricing crude oil in terms of the euro, and further, that OPEC may actually begin invoicing its crude oil exports in terms of euros. This latter step would require shifting out of dollars, with OPEC receiving euros in payment.


On November 6th of 2000 Iraq became the first country to receive all of its oil export payments in euros instead of American dollars. This switch was estimated to cost Iraq $270 million dollars, but Iraq had since actually come out on top due to the rise in the value of the euro, which was actually probably influenced by Iraq’s decision to use the euro as its foreign exchange currency. At the time of the switch Iraq was selling over $60 million in crude oil a day so its easy to see that the change to the use of the euro could have a positive effect on the value of the euro.

The euro hit another all-time high against the dollar overnight on growing concerns the mortgage mess will force the
Federal Reserve to cut interest rates.Euros traded as high as $1.4855 earlier in the session before pulling back to $1.4823 recently. That was still up from $1.4812 late Tuesday.

The Loonie Bin

Last week the US Dollar hit a record low against the single currency of the European Union known as the Euro. Not only that, but for the first time in more than thirty (30) years the United States dollar reached parity with Canadian loonies.

Unlike in 1976, when Canadian politics sent the loonies reeling, this time it’s a weak US dollar and possible recession that are to blame. However, it would be unfair to blame the US economy without realizing the strength of the Canadian economy and the relatively high commodities prices. For Canadians this means cheaper imports from the States as well as making this a good time for taking a vacation south of the Border. "It's a hallmark of successful economies that they also have strong currencies," Ross Healey, CEO of Strategic Analysis Corp., told CBC News. "Manufacturers may not like it very much, but unfortunately, that's the price we pay for running a tight ship."

Commodity strength powers rise
But it has been the soaring price of oil that has provided much of the fuel for the loonies long flight higher.

In global commodity trading, the price of a barrel of oil was at a record $83.32 USD Thursday afternoon, up $1.39 USD from Wednesday.

Gold prices surged to a 27-year high above $740 US an ounce, further bolstering the Canadian currency. Copper and wheat are at or near all-time highs. Canada produces and exports all of those commodities in abundance and the world has noticed.

Record levels of takeovers of Canadian companies have also lent power to the loonies, as have Canada's big budget and trade surpluses, and healthier housing market.
If it were to one day pass $1 USD. While this is rare for the US currency, let’s see how this will affect the currency markets this week. I assume that the Dollar will bounce back, but how long will it take?
For more information on investing in Canada and Canadian markets please visit http://www.investcanada.blogspot.com.