[jyl]

"Why would we ever care about the value of the canadian doillar? What would we ever buy from them except maybe oil?"

Currency exchange rates are important in the financial and business world, and that impacts our daily lives.

They impact trade. For example, when the USD (US dollar) is low versus the EUR (euro), it is easier for US companies to export to Europe. For a typical US multinational company (IBM, for example) Europe can represent 40% of its sales. Over the past year, this effect has helped boost US companies' sales, which helps sustain US economic growth and keeps Americans employed. At the same time, European companies have a harder time exporting to the US. Over the same period, this has hurt economic growth in, for example, Germany.

They impact US consumers through prices. For example, much of the lumber at Home Depot is from Canada. If the CDN (Canadian dollar) is very strong vs the USD, we may see higher lumber prices. Similarly for Porsche parts - remember when prices of 911 parts rose because the USD was falling against the EUR?

Also, they impact stock markets, bond markets and interest rates. The US relies on foreigners to support its markets, by buying appx $400 billion of Treasury bonds each year to fund the US budget deficit, and by investing in US stocks. When the USD falls, foreigners holding USD-denominated assets (stocks, bonds, etc) effectively lose money, since 1 USD now buys less in their local currency. This can affect foreigners' desire to buy US stocks and bonds, which in turn can affect our stock portfolios and the interest rates we pay.