Canadian dollar tumbles
The loonie is in free-fall, sinking below 69 cents (U.S.) today. And watch out if the Bank of Canada cuts its benchmark interest rate again next week.
The embattled currency tumbled to as low as about 68.7 cents, having been as high as 69.7 cents. It sat below the 69-cent mark at the close, having closed out yesterday at 69.6 cents.
There was a “huge move” in the Canadian dollar just around the time the London market was opening, said Royal Bank of Canada currency strategist Adam Cole.
The loonie was again pressured by oil prices, the risk-averse nature of the markets, and mounting expectations of a rate cut next week by Bank of Canada Governor Stephen Poloz and his colleagues, Mr. Cole said from London.
A cut in the key rate from 0.5 per cent isn’t fully “priced into” the market, he warned, which means the loonie’s freefall could speed up even more should the Bank of Canada act.
“If they do cut, we could be well through $1.45 next week,” Mr. Cole said, which would mean the loonie tumbling well below 69 cents.
“Conversely, if they don’t, I don’t see much of a recovery.”
That’s because expectations of another rate cut would simply be moved forward.
Scenes I'd love to see ...
Global stocks plunged today as yesterday’s optimism fast became so yesterday.
The rout began in Asia, spread to Europe and then to North America, where the Dow Jones industrial average was down by more than 500 points at one point.
“Oil prices plunged as much as 5 per cent back below $30 per barrel, taking emerging market and developed market equities as well as the rest of the commodities space down with them,” said CMC Markets analyst Jasper Lawler.
“Investors are shifting funds into areas of perceived safety including gold and government bonds in hopes of protecting themselves.”
TransAlta Corp. is taking a knife to its dividend, citing it as a prudent move as it shifts from coal to other energy sources.
The Canadian power-generating company said late yesterday its dividend will now be 16 cents annualized, among other moves aimed at moving to gas and renewable energy.
“The actions we are taking today are prudent and proactive steps that will maximize our long-term financial flexibility,” chief executive officer Dawn Farrell said in a statement.
And one more scene I'd love to see ...
“We don't want you, either.”
Video: How Bowie became a business sensation
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