These are stories Report on Business is following Friday, Nov. 7, 2014.
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Whither the loonie
A major Japanese financial group now expects the Canadian dollar to hit a low of about 84 cents U.S. next year.
But, on the bright side, at least the loonie's not the ruble.
In his latest forecast, Charles St-Arnaud of Nomura, who has followed the Canadian currency for a long time, projects the loonie will sink to just above the 84-cent mark by the second quarter of 2015.
Or, looked at the other way, that the U.S. dollar will rise to $1.19, up from his earlier projection of $1.15.
The loonie jumped today after the Canada and U.S. jobs reports, rising by about a penny at one point from its low of the day to top the 88-cent mark.
The loonie, as Canada's dollar coin is known, has been under pressure for some time, driven lower by sinking oil prices, the country's economic outlook and the belief that the central bank will lag the Federal Reserve in hiking interest rates.
The Bank of Canada now is in "neutral," meaning it's sending no signal to the markets of whether the next move in rates will be up or down. What is certain is that it's going nowhere fast.
"The BoC is expected to remain cautious on the economy over the next few months," Mr. St-Arnaud said.
"While there are signs that non-energy exports have improved so far this year, that improvement remains tentative," he added in yesterday's new forecast.
"Moreover, and importantly, the Canadian economy is likely to underperform the U.S. economy … While better growth in the U.S. should spill over into Canada in the coming quarters, this underperformance of the Canadian economy will also likely lead to a divergence in central bank expectations. On one side, the Federal Reserve is likely to continue to signal its commitment to normalization over the next few months, while the Bank of Canada is likely to remain cautious, as growth and inflation remain subdued."
That's in line with what other market players expect, but Mr. St-Arnaud's call for 84 cents is at the lower end of the spectrum among forecasters.
He projects a rise in commodity prices in the latter half of next year, which should perk the loonie up a bit, putting it at about 85.5 cents by the end of 2015.
The other big story in the currency markets is the collapse of the ruble amid the Ukraine crisis, weak oil prices and an ailing Russian economy.
Chief currency strategist Camilla Sutton of Bank of Nova Scotia described the ruble's showing as "very, very weak," perhaps being a bit kind.
Since July, Ms. Sutton noted, Russia's currency has lost 43 per cent of its value, though it was up today.
Now, a U.S. dollar will you about 46.5 rubles, compared to 33.5 at the end of June.
- Loonie sinks to 5-year low on oil price war, 'very dovish' Bank of Canada
- Russia's central bank warns of more interventions to halt ruble slide
Jobless levels dip
Unemployment in Canada and the United States is now at its lowest level since before the recession took its ugly toll.
Canada's economy churned out a better-than-expected 43,100 jobs in October, driving down the unemployment rate to 6.5 per cent, the lowest level since November, 2008, The Globe and Mail's Tavia Grant reports.
Over the course of the past year, employment levels in Canada have jumped by 182,000, or 1 per cent, largely on the strength of the past two months.
Full-time employment is up 81,000 since October of 2013, and part-time work by 101,000, Statistics Canada said today.
Last month, full-time work rose by 26,500, and part-time positions by 16,500.
"The private sector again stepped up, with the data likely part of a the reversal of the huge, and implausibly large, report of massive job losses two months earlier," said chief economist Avery Shenfeld of CIBC World Markets, noting the wide ups and down of the Statistics Canada reports.
"Private sector gains of 71,000 were broadly based outside a big drop in resources," he added.
"The jobless rate took a dive to a new cycle low of 6.5 per cent, making a leap towards the low 6-per-cent range likely to be deemed to be full employment."
Canadian governments cut back to the tune of 54,000 jobs, however.
When you strip those counted as self-employed, noted senior economist Krishen Rangasamy of National Bank, paid employment rose by 17,000.
"The private sector has now created 194,000 jobs in the last two months, the best tally on records going back to 1980," he said.
"The employment increase in manufacturing is the best in over two years. The report's only disappointment is the decline in government jobs, which capped gains for paid employment. The latter, however, still grew a solid 146,000 in the last couple of months. On a 12-month moving average basis, Canada is creating a decent 15,000 jobs per month, of which 12,000 are paid private sector jobs."
A separate report from the U.S. Labor Department showed 214,000 jobs created in October, sending the unemployment rate down to 5.8 per cent, the lowest since mid-2008.
"Along with a decline in the unemployment rate, which now sits almost a full percentage point below its end-of-year 2013 level, this points to a still-solid pace of improvement in labour markets," Royal Bank of Canada economist Nathan Janzen said of the U.S. numbers.
- Tavia Grant: Canada's jobless rate hits lowest level since late 2008
- U.S. extends hiring streak with 214,000 jobs added in October
- Tavia Grant: What's missing from the labour market: data
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