My observations in the last year lead me to believe that I should buy US securities under USD/CAD 1.12 at Scotiabank, preferably <= 1.10. Right now, around 1.08 – 1.09 is certainly favorable to buy some US securities which are undervalued though discounted excellent businesses are hard to come by in this fully valued market.
In my self-directed non-registered account, Scotiabank separates the Canadian positions and US positions. Specifically, in the Canadian Account Positions section, all positions remain in the Canadian currency, while in the U.S. Account Positions portion, all positions remain in the USD currency.
US Stocks in the Canadian Account Positions
Each time I buy a US stock here, Canadian dollars is converted to US dollars. Likewise, each time I sell a US stock here, the proceeds is converted back to Canadian currency. And if I want to buy again, I need to convert to USD again. In between each currency exchange, Scotiabank takes a haircut of 2%.
For example, on July 3, 2014, USD/CAD is 1.0627 (shown on Google Finance), while Scotiabank charges 1.0845 (that is a 2.18% difference). In addition to paying the 1.0845 currency exchange fee, I need to pay $9.99 per trade in the currency of the stock purchased. If I buy $1000 worth of shares, that is 1% fee. In total, the fee I would have paid for a trade on July 3, would have been 8.45% + 1%, that is 9.45%. Of course, I buy US stocks, expecting that the currency exchange rate to stay about the same if not US dollars eventually reverting back to the norm of $0.86USD to $1CAN.
To minimize paying for currency exchange (which would trigger the 2% fee by Scotiabank), I only buy non-dividend paying US stocks in the Canadian Account Positions section of my non-registered account.