Analysts have cut their bullish near-term forecasts for the Canadian dollar as China’s economy weakens and the gap between U.S. and Canadian bond yields grows, but still expect the currency to be stronger in a year, a Reuters poll showed.
The median forecast of nearly 40 foreign exchange analysts was for the loonie to strengthen 1.9% to 1.34 per U.S. dollar, or 74.63 U.S. cents, in three months, compared to 1.32 in last month’s forecast.
It was then expected to advance to 1.29 in a year, matching August’s forecast and a gain of 5.8%.
“The loonie has lost a few feathers in recent weeks,” said Stefane Marion, chief economist and strategist at National Bank of Canada.
“Widening interest rate differentials with the U.S. and weaker commodity prices due to a slowing Chinese economy are keeping the CAD in check.”
China’s economic growth is slowing as policymakers try to fix a property market downturn. Canada is a major producer of commodities, so the loonie tends to be sensitive to the global growth outlook.
The currency has weakened about 4% from its July peak, while the Canadian 2-year yield has fallen in recent weeks further below its U.S. equivalent.
On Wednesday, the gap was 36.5 basis points in favor of the U.S. note, its biggest since May 3, as the Bank of Canada left its key interest rate on hold at a 22-year high of 5%, noting the economy had entered a period of weaker growth.
Canada’s economy unexpectedly contracted in the second quarter at an annualized rate of 0.2%, and growth was most likely flat in July, data showed on Friday.
Canadian employment data for August, due on Friday, could offer further clues on the strength of domestic activity.
High borrowing costs are a major concern for Canadians after they borrowed heavily during the pandemic to participate in a red-hot housing market and due to a particularly short mortgage cycle.
Nearly all Canadian mortgages have a term of five years or less, compared with the 30-year term that is common in the U.S.
“We believe market expectations of no rate cuts by the Bank of Canada next year could be in for a surprise,” Marion said.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
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