Canadian dollar value sinks to 4-month low – CTV News
The value of the loonie hit a four-month low compared with the U.S. dollar on Wednesday, but some experts say Canadian consumers shouldn’t expect their wallets to take a major hit.
The Canadian dollar traded at 72.54 U.S. cents on Wednesday, the weakest level in more than five months.
CIBC chief economist Avery Shenfeld said the weak loonie is reflective of the U.S. Federal Reserve getting more aggressive on interest rate hikes while the Bank of Canada holds its key rate steady for the first time in a year.
While import cost hikes could lead to higher prices for items such as groceries, he said the effect on Canada’s inflation rate should be minimal.
“This is pretty small potatoes in terms of the inflation rate. We’re talking a decimal place here or there,” Shenfeld said.
“Even if something is an imported good, the import price doesn’t tend to pass on all the exchange rate moves. It tends to show up in things like fresh fruits and vegetables, but if you’re talking about a T-shirt at the department store, it was probably made outside North America.”
The Bank of Canada held its key interest rate at 4.5 per cent Wednesday based on its assessment of recent economic data. Shenfeld noted the central bank signalled it won’t respond to a modest further weakening of the currency.
“Given the choice, I think Canadians would be happier not to see another rate hike than to protect the Canadian dollar from another cent or two slide,” he said.
Darcy Briggs, senior vice-president and portfolio manager at Franklin Templeton Canada, said he expected the loonie would continue to trade soft until the U.S. Federal Reserve reaches the end of its tightening cycle.
“That’s the thing with currencies. They make some pretty dramatic moves pretty quickly,” he said. “They’ll kind of lay in limbo and then volatility spikes.”
Briggs said that could make life more expensive in the meantime.
“If the Canadian dollar is depreciating, and it’s depreciating against the number of currency baskets, then any products that we import, by definition, will be more expensive because we’re paying it with a cheaper Canadian dollar,” he said.
“That will take a bite out of consumption and it’ll actually factor into inflation.”
University of Toronto economist Angelo Melino predicted the divergence between the Canadian and U.S. interest rates to last at least 10 months.
But while the weakened loonie could make products denominated in U.S. dollars, more expensive, Melino said the effect on the Canadian inflation rate won’t be major.
“They’re going to matter for specific goods and services,” he said.
“If you’re planning to go to Florida for vacation, or Disneyland, you’re going to see it right away.”
Should the Canadian dollar remain low for an extended period, Melino said that could create a shift in demand away from U.S goods and services toward Canadian ones.
“Both Canadians and Americans will be buying goods and services produced in Canada and that tends to be good for Canadian output, but also inflationary,” he said.
This report by The Canadian Press was first published March 8, 2023.
Biden's Canada visit is long overdue, expert says – CTV News
U.S. President Joe Biden will be making his much-anticipated visit to Canada in just a matter of weeks. This will be his first time visiting America’s northern neighbour since taking office in 2021.
Questions abound as to why President Biden is only now making the visit more than two years into his presidency. Previous presidents made the trek much sooner. The White House has not offered an explanation for the long wait but as the saying goes: better late than never. However, it is also the first time since George W. Bush, that a sitting U.S. president has been to Canada as part of a bilateral visit.
Presidents Obama’s and Trump’s visits all coincided with multilateral or trilateral engagements. This alone makes the sojourn indeed noteworthy. Still, while the trip is long overdue, it is timely considering the pressing issues confronting both nations.
Like any long-standing relationship, complications abound. Percolating just beneath the surface, spiralling inflation; a nagging migrant crisis; raging climate change, and a bellicose China are just a few of the issues that threaten this united front.
The United States is Canada’s biggest trading partner, exceeding more than CAD$1 trillion (US$745.1 billion) in bilateral trade in goods and services in 2021. However, as the “Freedom Convoy” protest last year revealed, that robust and fruitful economic relationship can be fragile and fraught with danger on both sides.
The blockade brought auto production of major car manufacturers to its knees as the protests halted movement between the two nations. Now, out-of-control inflation, spurred by supply chain issues and exacerbated by the war in Ukraine, has global leaders on edge.
Biden and Prime Minister Justin Trudeau must now find common ground to ensure economic stability. Amid the backdrop and only adding to the growing economic uncertainty, recalcitrant House Republicans are threatening to push the U.S. economy further towards the edge of the debt-ceiling cliff. No doubt, this game of political chicken being played in Washington could very well send Canada’s entire economy spiralling into the abyss if a deal is not reached by the summer.
Unfortunately, a fragile and potentially reeling economy is but one of the most pressing and near term challenges facing both nations. China’s truculence has been on full display in recent months. Spy balloons illegally flying over American and Canadian airspace have made national security an equally and ominous matter the north must immediately confront. The two nations’ efforts to jointly repel the potential threat was successful. However, more challenges from a rising China and the growing threat of autocracy worldwide is pushing this western alliance to make hard choices sooner, rather than later.
Climate change is another salient issue that is moving the two nations closer rather than pulling them apart. Biden has made tackling climate change a signature issue of his Administration. He helped launch the Global Methane Pledge at COP26, which cuts total methane emissions by at least 30 per cent by 2030.
The White House also committed to an ambitious new U.S. target for cutting climate pollution 50 per cent below 2005 levels by 2030. This number is almost double what was promised in the Paris Agreement.
Speaking of which, on his very first day in office, Biden announced the United States would rejoin the Paris Agreement, an international pact of more than 190 countries committed to averting the disastrous effects of climate change.
The Biden Administration has moved aggressively on climate change but persistent drought; voluminous wildfires; and deadly storms continue to punish both nations costing billions in clean up and restoration efforts.
Pledges and global confabs have been a great first step. However, as Prime Minister Trudeau bills Canada as a global climate leader, the country lags behind a number of its G7 and G20 counterparts in reducing greenhouse gas emissions. Since 2000, Canada’s emissions have actually risen by 27 per cent. Biden and Trudeau have said all the right things on climate and undoubtedly they will again during their bilateral. The question now is will their actions match their words?
Both nations have always worked largely on one accord but where there could be a source of real angst is the growing migrant problem. The southern border between the United States and Mexico remains porous and the unyielding flow of illegal crossings have vexed the Biden Administration since day one. Just recently, the White House announced it is considering bringing back a Trump-era policy of detaining families.
A policy that is largely unpopular with the president’s base and immigration activists. Moreover, U.S. comprehensive immigration reform remains elusive and is a non-starter in this era of divided government.
Haiti’s further descent into state failure compounds the problem for both nations. The U.S. would like to see Canada lead a multinational effort in Haiti to address its myriad of problems. Canada, however, is resisting those entreaties, instead pledging aid. Unfortunately, the security situation grows increasingly dire with each passing day and no relief in sight.
As the island nation continues to become a cesspool of violence and dysfunction, its citizens could begin fleeing en masse; seeking refuge on North American shores. Biden needs the Canadian government to operate as an active and hands-on partner in Haiti, if for no other reason than to ease the migration load straining an overburdened American immigration system.
Biden’s trip is being described by the White House as re-affirming the commitment to the U.S.-Canada partnership. In fact, there is far more that binds the two nations and its respective people than divides them.
A vibrant working democracy, Canada is more than just the neighbour to the north; it is an extension of home. The President and First Lady will be on friendly ground when they visit. The 150-year-old relationship is one of the closest; most comprehensive in the world. Still, many Canadians will be left to wonder; what took you so long?
Inflation, National and Private Debt, Possible Economic Collapse
“You do not die from falling into the water. You die if you stay submerged in it”(A Wise Person)
The entire world is drowning not in the water, but in massive unpayable debt. This situation existed before the pandemic, but the pandemic gave our governments the needed tools to carry on into blinding debt. Blinding because politicians, public and private managers, and most of us don’t talk about our portion of the private and public debt that hangs over us like the sword of Damocles. Our eyes are wide shut, and our ears are covered by the headphones we paid $350.00 for with our credit cards. Like the three amounts of money of old, not hearing, seeing, or speaking about DEBT.
Nations whose populations live in poverty, and 2-3rd nation status nations trying to build their economies so they can live the Kardashian lives, like the “national Jones” of the west and east alike. National politics disallow politicians from considering their budgets and debt levels. It’s all about staying in power, so spending must continue so that their allies and supporters in the Middle-Upper Classes continue to support them.
Our personal lives present people with two things in their hands, electric devices, and credit cards. Since one’s feelings have become so important during these difficult days, denying oneself is often never an issue, unless credit limits have been reached. Credit denial, and interest rate increases will follow. We use credit cards to pay for gas so we can go to work, providing an income that will dwindle as one’s bills are partially paid for, never paying all. Things will be better next month, you tell yourself.
Our need for personal emotional uplifting allows us to continue to pay less cash and more credit. Not that many people save their income. Society’s future is based upon a false economy where most things are paid for with borrowed money. What will happen when the credit roller coaster stops abruptly? Perhaps recession and possible national or international depression?
When will governments return to balanced budgets? Can private citizens receive a high school economics lesson regarding personal budgets and how to save for a rainy day?
Power in relation to finance is a full-scope issue. So long as we have the power to choose for others or ourselves regarding finances both governments and private individuals are in peril. Especially if both public and private sectors show no accountability or transparency regarding what, why, and how much is spent on our behalf.
Security to be top of mind during Joe Biden’s trip to Canada
Joe Biden‘s last official visit to Canada came with a palpable sense of foreboding.
Change was in the air. Authoritarian leaders in Syria and Turkey were consolidating power. Britain had voted to leave the European Union. And Donald Trump was waiting in the wings to take over the White House.
“Genuine leaders” were in short supply, and Canada and Prime Minister Justin Trudeau would be called upon to step up, said the U.S. vice-president, who was on a farewell tour of sorts in the waning days of the Obama administration.
Six years later, Biden is coming back _ this time as president _ and the world is very different. His message likely won’t be.
“There’s a seriousness to this moment in America,” said Goldy Hyder, the president and CEO of the Business Council of Canada, who spent much of last week meeting with U.S. officials in D.C.
Chinese spy balloons are drifting through North American airspace. Russian MiG fighter jets are downing U.S. drones as the bloody war in Ukraine grinds on. North Korea is testing long-range ballistic missiles.
And Xi Jinping is sitting down Monday with Vladimir Putin in Moscow, a meeting that will underscore the geopolitical context in which the U.S. sees the world _ and amp up the pressure on Canada to remain a willing and reliable partner, not only in Ukraine but elsewhere as well.
“It shines a much brighter light on security in all its forms: national security, economic security, energy security, cybersecurity _ all of these things come home to roost,” Hyder said of that meeting.
“For America, there’s nothing more important, and there should nothing more important for us, quite frankly.”
Enter critical minerals, the vital components of electric-vehicle batteries, semiconductors, wind turbines and military equipment that both Biden and Trudeau consider pivotal to the growth of the green economy.
Ending Chinese dominance in that space is Job 1 for the Biden administration, and Canada has critical minerals in abundance. But it takes time to build an extractive industry virtually from scratch, especially in this day and age _ and experts say the U.S. is growing impatient.
“The reality is, nobody’s moving fast enough, relative to escalating demand,” said Eric Miller, president of the D.C.-based Rideau Potomac Strategy Group, which specializes in Canada-U.S. issues.
More and more jurisdictions, including the European Union and U.S. states like California and Maryland, are drawing up ambitious plans to end the manufacture of internal-combustion vehicles by 2035, Miller noted.
More on Canada
That’s just 12 years away, while it can take upwards of a decade to get approval for a mine, let alone raise the money, build it and put it into production, he added.
“The challenge you have in a democracy is that processes are slow, and are in reality too slow relative to the needs of making the green transition,” Miller said.
“So when you when you look across the landscape, of course, you think that other people’s systems are inherently easier than your own.”
National security, too, has been top of mind ever since last month’s flurry of floating objects exposed what Norad commander Gen. Glen VanHerck called a “domain awareness gap” in North America’s aging binational defence system.
Updating Norad has long been an ongoing priority for both countries, but rarely one that either side talked about much in public, said Andrea Charron, a professor of international relations at the University of Manitoba.
“The problem for Norad is it’s literally under the political radar _ it’s difficult to get politicians to commit funds and recognize that it’s been the first line of defence for North America for 65 years,” Charron said.
“Russian aggression and these Chinese balloons now make it politically salient to try and speed things up and make those commitments.”
Hyder said he expects the U.S. to continue to press Canada on meeting its NATO spending commitments, and reiterate hopes it will eventually agree to take on a leading role in restoring some order in lawless, gang-ravaged Haiti.
So far, international efforts to provide training and resources to the country’s national police force aren’t getting the job done, the UN’s special envoy to Haiti warned in D.C. as she called for countries to put boots on the ground.
“We’re not getting the job done,” Helen La Lime told a meeting of the Organization of American States last week. “We need to get down to the business of building this country back.”
Roving criminal gangs have been steadily rising in power following the 2021 assassination of president Jovenel Moise, and are now said to control more than half of the capital city of Port-au-Prince.
Even in the face of public _ if diplomatic _ pressure from U.S. officials, Trudeau would rather help from a distance, investing in security forces and using sanctions to target the powerful Haitian elites fostering the unrest.
Haiti is a “complete and total mess” that can’t simply be fixed with military intervention, no matter the size of the force, Charron warned. The Canadian Armed Forces are already overstretched, facing ongoing long-term commitments to Ukraine and a chronic shortage of personnel, she added.
“Haiti is a quagmire, and nobody’s particularly keen to get in there _ especially if the U.S. isn’t there to be the exit strategy.”
The question of irregular migration in both directions across the Canada-U.S. border is also likely to come up during the two-day visit, although the Biden administration is not keen to renegotiate the Safe Third Country Agreement, which critics say encourages migrants to sneak into Canada in order to claim asylum.
As well, look for plenty of mentions of the U.S.-Mexico-Canada Agreement, the NAFTA successor known in Canada as CUSMA that now provides the framework for much of the economic relationship between the two countries.
No one is keen to renegotiate that deal right now either, but they need to think about it nonetheless, Hyder said: a six-year review clause means it could be reopened by 2026.
“We all had a near-death experience a few years ago; it doesn’t seem like it was that long ago,” he said.
“And yet here we are. In a matter of a few years, we’ll be back at it again.”
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