Has the loonie gone too far?
There are questions today about whether the Canadian dollar has bounced too far too fast.
Heading toward the 75-cent U.S. mark before falling back today, the loonie had jumped by almost 10 per cent since its depths in January.
“But note that underlying commodity prices, which have been the dominant driver for the currency for years, have been much more stable than the [Canadian dollar] in the past three months,” said BMO Nesbitt Burns chief economist Douglas Porter.
“And, just as the deep dive in January looked overdone, this rapid rebound also looks overdone, assuming resource prices don’t soon follow suit,” he added.
“Based on current commodity prices, we would suggest closer to 71-72 cents is more sustainable for the [Canadian dollar].”
The currency bounced higher yesterday after a better-than-expected reading by Statistics Canada on the state of the economy, which expanded at an annual rate of 0.8 per cent in the fourth quarter.
Some observers see it climbing higher, still.
“The loonie has been steadily gaining since the end of January, and the recovery in oil prices explains an important part of the current appreciation,” said analyst Ipek Ozkardeskaya of London Capital Group.
“Should [West Texas intermediate] take over the $35 level, there will be little reason to pull the loonie back from appreciating over 75 cents to the 80-cent level.”
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McKesson to buy Rexall
U.S. health-care services company McKesson Corp. has struck a $3-billion deal for Canada’s Rexall drugstore chain and related companies, The Globe and Mail’s Marina Strauss reports.
The move comes amid pressure on Rexall, which is owned by the Katz Group of Edmonton, to find a partner after Loblaw Cos. Ltd. acquired Shoppers Drug Mart Corp. two years ago, giving it an edge over rivals in its purchasing power and other operations.
And when Rexall hired Jurgen Schreiber, a former CEO of Shoppers, last summer, it was a signal to many industry observers that he may have had a mandate to look for a suitor for Rexall.
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Vancouver No. 1
Canada’s two hottest real estate markets are among the world leaders in a new study of prime housing markets.
Vancouver, in fact, is the global leader, with Toronto at No. 12, in the rankings released today by Frank Knight, a real estate consultancy that tracks 100 luxury property markets in its annual wealth study.
“Vancouver leads the rankings by some margin, with prices accelerating 25 per cent during 2015,” said the study, which defined prime property as the “most desirable and most expensive,” and generally in the top 5 per cent of a market.
“A lack of supply, coupled with foreign demand, spurred on by a weaker Canadian dollar explain the city’s stellar performance.”
Vancouver was followed by Sydney, Shanghai, Istanbul, Munich, Melbourne, San Francisco, Auckland, Amsterdam, Monaco and Berlin.
Then came Toronto, with a rise in luxury property values of 8 per cent, ahead of Cape Town, Miami and Bangkok to round out the top 15.
CP said to eye CSX
It appears that two U.S. rivals have now sent Canadian Pacific Railway Ltd. packing.
CP approached CSX Corp. in January about a possible acquisition, but was rejected, The Wall Street Journal reports.
That follows several bids for Norfolk Southern by the Canadian railway last year.
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