Economy
Canadian dollar seen up in one year if economy avoids hard landing: Reuters poll
TORONTO, April 5 (Reuters) – The Canadian dollar is set to rally over the coming year, after a period in which it consolidates its recent gains, as an expected slowdown in economic activity stops short of a hard landing for the economy, a Reuters poll showed on Wednesday.
Since early March the Canadian currency has rallied about 3% against its U.S. counterpart as worries the global banking crisis would lead to a credit crunch eased and the U.S. dollar lost ground against a basket of major currencies.
A surge this week in the price of oil, one of Canada’s major exports, has added further momentum for the currency. It touched on Tuesday its strongest intraday level in almost seven weeks, near 1.34 per U.S. dollar, or 74.63 U.S. cents.
The median forecast of nearly 50 currency analysts was for the loonie to weaken to 1.35 per U.S. dollar in three months’ time, compared to 1.34 expected in last month’s forecast. But it was then expected to rally to 1.30 in a year, which is a gain of 3.5%.
“It’s basically a reflection that you get the moderation in (economic) growth … more of a soft landing than a hard landing, and so the CAD can do okay in that environment,” said Mazen Issa, senior FX strategist at TD Securities.
“But if the U.S. (outlook) becomes particularly precarious, if lending conditions tighten significantly … then we could have a little more problems globally.”
The Bank of Canada is ready to step in with support if the banking system comes under severe strain, but now it is not even close to being worried about the health of the financial system, Deputy Governor Toni Gravelle said last Wednesday.
Next Wednesday, the central bank is due to make an interest rate decision and update its economic forecasts. Money markets and economists expect the benchmark interest rate to be left unchanged at a 15-year high of 4.50% after the BoC paused its hiking campaign last month.
Other central banks, such as the U.S. Federal Reserve, may also soon pause.
“I think it’s an environment where the (U.S.) dollar loses a bit of its edge,” Issa said. “It will give up some ground on the rate differential side.”
The gap between Canada’s two-year yield and its U.S. equivalent was trading on Tuesday at 27 basis points in favour of the U.S. bond, its narrowest gap since early January.
(For other stories from the April Reuters foreign exchange poll:)
Economy
Minimum wage to hire higher-paid temporary foreign workers set to increase
OTTAWA – The federal government is expected to boost the minimum hourly wage that must be paid to temporary foreign workers in the high-wage stream as a way to encourage employers to hire more Canadian staff.
Under the current program’s high-wage labour market impact assessment (LMIA) stream, an employer must pay at least the median income in their province to qualify for a permit. A government official, who The Canadian Press is not naming because they are not authorized to speak publicly about the change, said Employment Minister Randy Boissonnault will announce Tuesday that the threshold will increase to 20 per cent above the provincial median hourly wage.
The change is scheduled to come into force on Nov. 8.
As with previous changes to the Temporary Foreign Worker program, the government’s goal is to encourage employers to hire more Canadian workers. The Liberal government has faced criticism for increasing the number of temporary residents allowed into Canada, which many have linked to housing shortages and a higher cost of living.
The program has also come under fire for allegations of mistreatment of workers.
A LMIA is required for an employer to hire a temporary foreign worker, and is used to demonstrate there aren’t enough Canadian workers to fill the positions they are filling.
In Ontario, the median hourly wage is $28.39 for the high-wage bracket, so once the change takes effect an employer will need to pay at least $34.07 per hour.
The government official estimates this change will affect up to 34,000 workers under the LMIA high-wage stream. Existing work permits will not be affected, but the official said the planned change will affect their renewals.
According to public data from Immigration, Refugees and Citizenship Canada, 183,820 temporary foreign worker permits became effective in 2023. That was up from 98,025 in 2019 — an 88 per cent increase.
The upcoming change is the latest in a series of moves to tighten eligibility rules in order to limit temporary residents, including international students and foreign workers. Those changes include imposing caps on the percentage of low-wage foreign workers in some sectors and ending permits in metropolitan areas with high unemployment rates.
Temporary foreign workers in the agriculture sector are not affected by past rule changes.
This report by The Canadian Press was first published Oct. 21, 2024.
— With files from Nojoud Al Mallees
The Canadian Press. All rights reserved.
Economy
PBO projects deficit exceeded Liberals’ $40B pledge, economy to rebound in 2025
OTTAWA – The parliamentary budget officer says the federal government likely failed to keep its deficit below its promised $40 billion cap in the last fiscal year.
However the PBO also projects in its latest economic and fiscal outlook today that weak economic growth this year will begin to rebound in 2025.
The budget watchdog estimates in its report that the federal government posted a $46.8 billion deficit for the 2023-24 fiscal year.
Finance Minister Chrystia Freeland pledged a year ago to keep the deficit capped at $40 billion and in her spring budget said the deficit for 2023-24 stayed in line with that promise.
The final tally of the last year’s deficit will be confirmed when the government publishes its annual public accounts report this fall.
The PBO says economic growth will remain tepid this year but will rebound in 2025 as the Bank of Canada’s interest rate cuts stimulate spending and business investment.
This report by The Canadian Press was first published Oct. 17, 2024.
The Canadian Press. All rights reserved.
Economy
Statistics Canada says levels of food insecurity rose in 2022
OTTAWA – Statistics Canada says the level of food insecurity increased in 2022 as inflation hit peak levels.
In a report using data from the Canadian community health survey, the agency says 15.6 per cent of households experienced some level of food insecurity in 2022 after being relatively stable from 2017 to 2021.
The reading was up from 9.6 per cent in 2017 and 11.6 per cent in 2018.
Statistics Canada says the prevalence of household food insecurity was slightly lower and stable during the pandemic years as it fell to 8.5 per cent in the fall of 2020 and 9.1 per cent in 2021.
In addition to an increase in the prevalence of food insecurity in 2022, the agency says there was an increase in the severity as more households reported moderate or severe food insecurity.
It also noted an increase in the number of Canadians living in moderately or severely food insecure households was also seen in the Canadian income survey data collected in the first half of 2023.
This report by The Canadian Press was first published Oct 16, 2024.
The Canadian Press. All rights reserved.
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