Briefing highlights
- Loonie could soon hit 80¢
- Trump: Just sayin’
- Markets at a glance
- What to watch for today
- Second Cup getting into cannabis
- Sanofi to invest in Toronto facility
- Shaw results beat estimates
The Canadian dollar may soon see 80 US cents.
The loonie is climbing for several reasons, trading this afternoon between 79.3 and 79.4 US cents, having been pushed higher this week, though now actually down slightly from Wednesday’s close.
This comes amid a more optimistic tone at the NAFTA bargaining table, stronger oil prices and a softer U.S. dollar.
“The loonie is back in style,” said Bipan Rai, North America head of foreign exchange strategy at CIBC World Markets.
“The trade premium that was previously priced in has been dramatically reduced off of both Xi ’s speech and a less hostile tone to NAFTA,” Mr. Rai said.
“Additionally, expectations for Canadian data are already very low, so when you do see a positive surprise, there tends to be more tailwinds for the loonie,” he added.
“Exhibit A is this week’s reaction to the business outlook survey.”
Mr. Rai was referring to three developments:
First, Chinese President Xi Jinping earlier this week calmed market fears of a punishing trade war with the U.S.
That came amid news that Canadian, American and Mexican negotiators are pushing hard for a new North American free-trade agreement.
It also came as a Bank of Canada survey showed optimism among domestic businesses, a key reading for the central bank as it ponders when next to raise its benchmark interest rate.
Of course, as fears of a trade war eased, those of a real war mounted as Russia and the U.S. traded threats over Syria, hurting the U.S. dollar.
Those threats also drove oil prices higher, supporting commodity-linked currencies like the loonie, though crude has settled down today.
“We’re targeting a move to the 1.2485 mark, but we could see an extension to the 1.2400 mark,” Mr. Rai said Wednesday, meaning the Canadian dollar at about 80 US cents for the former and just above 80.5 for the latter.
“We’re reluctant to chase CAD gains beyond there for now,” he added, referring to the loonie by its symbol.
David Rosenberg, chief economist at Gluskin Sheff + Associates, put it in somewhat different language.
“The [Commodity Research Bureau] index has bounced back above its 50-day trend line, as well,” Mr. Rosenberg said.
“This triggered a massive short squeeze on the Canadian dollar as it has quickly moved to C$1.26, and in the process has fractionally broke all its major averages,” he added Wednesday, meaning the currency at about 79.5 US cents.
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Just sayin’
Photo illustration
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Markets at a glance
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What to watch for today
Mark Carney, who the Bank of England stole from the Bank of Canada, speaks at a Toronto economic summit.
Bank of England governor Mark CarneyVictoria Jones
He’s got a lot on his plate, what with Brexit and all, but he’s never been shy when it comes to talking about his home turf, particularly on the housing front.
And, who knows, maybe he’ll talk about how he’d like to be prime minister one day. Of Canada, where things might be easier as we’ve got no one to separate from.
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