Nova Scotia Comes Alive in 2011!

The U.S. Dollar Bucks Up

1.00 CAD = .84 US

Just when we though the U.S. greenback was going to tank even further against the Canadian dollar it was the Canuck buck that dove like a leaky submarine. In fact it went from 1.08 U.S. in January to .77 in October before settling at around 84 cents.

So what gives? The U.S. economy is in rougher shape that the Canadian one, their industries needing 3/4 Trillion dollars for a bail-out to the financial sector. However, we have to remember that Canada has a strange relationship with the U.S. As one politician stated long ago, “We are like a mouse sleeping with an elephant. They like each other but the mouse has to respond to the elephant’s every twitch or be squashed.”

It all started in 2005 when the U.S. spent $723.6 billion more on goods and services oversees than it sold. Along with fighting two wars and spending billions on starting a new missile defense system the U.S. had to sell off the greenback to afford oil and other staples.

So what did the low U.S. buck do for travel? Well, it started a surge in Canadians visiting the U.S. because they were enjoying a better exchange or, at worst, par for many services that were cheaper. However, the Canadian tourism market has been in steady decline since 2001following the weakening U.S. dollar.

The financial pundits have now blamed the diving act of the Canadian dollar on its strength. Confused? Well, many American companies bought Canadian goods before the surge because they could buy them cheaper. When the U.S. dollar fell Canadian goods and services became more expensive and so American companies bought them at home or Mexico. Add to the this the adoption of WHTI, the Western Hemisphere Travel Initiative – which states that trans-border travels have to use passports, and now there is a growing unwillingness of even America’s staunchest tourists to stay in the Lower 48.

Enter the decline in demand for oil. Next to OPEC, Canada is one of the biggest exporters of oil to the U.S. and the rising Canadian dollar against the U.S. currency was tied to the price of oil. So when demand fell, the Candian dollar fell with it.

So what does this mean for travel? Well, with Canadian tour wholesalers and retailers hurting U.S. travelers can get great deals in Canada right now. So, if you fly into Halifax you can rent a car, get gas that’s down to .90CDN a litre (a little over $3.00 a gallon) and stay in accommodations that are back to 1995 prices.

And this is a good thing.