Reader Question About The Canadian Dollar

A Reader Asks:

Hi David,

How does an average guy like me with an Ameritrade account take advantage of the Canadian Dollar rising (13% since September). Are there any currency products that are traded? Also, can I short the dollar at the same time?

Thanks,
Mark D

Sun Behind Sign Heya Mark,

There is an exchange traded fund that will let you play the rise of the Canadian Dollar relative to the US Currency.  I wouldn't do it with my own money at this point.  I think the fall in the U.S. Dollar is getting overdone.  That is a long term veiw and doesn't mean things can't get worse for the Greenback in the next few months.  I started buying the Euro at $1.06 in the early this decade and kept buying as it fell another 20% in my face for two years.  Currency mispricings take a long time to work out.

So to answer your question, there is an exchange traded fund called Currency Shares Canadian Dollar (FXC – $107.25).  But playing currencies is playing economics.

My way to play any further decline in the dollar is also to pick a currency and stock market region I still feel is undervalued: Asia.  I'm playing with the ETF Vanguard Asia (VPL – $74.00).

Best of luck with your currency bets.  But be careful.

Disclosure:  I own VPL.  I do not own FXC.  I had about 500 Canadian dollars in a drawer at home but I sold them last month to a Canadian friend.  I like Canada, I took the photo above while cycling in Quebec last summer.  I like their beer, they way they mostly embrace a bi-lingual culture, their skiing, and their irreverent political attitudes.  They said no to Bush's invasion of Iraq; what's not to like.  Still I am who I am and I would rather be American.

Canadian Maple Dollar
Photo:slightlynorth, Creative Commons, Flickr