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morning business briefing

Briefing highlights

  • Canola and the Canadian dollar
  • Loonie at about 75 cents
  • An Ontario pot scene I’d love to see
  • Global markets mixed so far
  • New York futures point lower
  • What to watch for today
  • Telecom complaints on the rise
  • Global trade growth to slow: WTO
  • Required Reading

Canola and the loonie

China’s “crackdown” on Canadian canola exports could sink an already troubled Canadian dollar, CIBC World Market says.

This comes as the loonie’s outlook is already hampered, for a few reasons but largely because the Bank of Canada is holding interest rates steady, with no timeline for raising its benchmark at this point.

As The Globe and Mail’s Alexandra Posadzki and Eric Atkins report, China’s expanded ban, which comes amid a heated dispute between Beijing and Ottawa since Canada’s arrest of Huawei’s chief financial officer, has sent farmers in search of other buyers.

Now, said CIBC senior economist Royce Mendes and analyst Taylor Rochwerg, there’s a threat to Canada’s trade balance and, thus, risks for the loonie.

“China’s crackdown on Canadian canola could add to the fall in crop product exports, which were down 25 per cent in January’s trade data after soybean shipments to the country declined,” said Mr. Mendes and Ms. Rochwerg.

“Last year, Canada exported $4.4-billion worth of canola products to China, the largest vegetable oil consumer in the world,” they added in a report.

“Exports to China have been helping diversify Canada’s export base, with growth to that nation outrunning increases in shipments to the U.S. However, if tensions persist and China continues to block imports from Canadian canola producers, the frictions could show up as a drag on the trade balance, as prices would likely fall even if producers sold the products to other destinations.”

This would ripple through the trade sector, as Canada is trying to boost its non-oil exports, which is how it gets to the loonie.

“The canola crackdown will help drive down the Canadian dollar, as there will be lower demand for Canadian exports,” Ms. Rochwerg said.

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A scene I’d love to see

Photo illustration

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Stocks mixed

Global markets are mixed so far, with New York treading water.

Tokyo’s Nikkei slipped marginally, while Hong Kong’s Hang Seng and the Shanghai Composite each gained 0.2 per cent.

In Europe, London’s FTSE 100, Germany’s DAX and the Paris CAC 40 were up by between 0.2 and 0.7 per cent by about 6:40 a.m. ET.

New York futures were little changed.

The Canadian dollar was at about 75 US cents.

“European markets are mixed this morning, but a weaker pound has helped the FTSE 100 to rise above the gloom,” said IG chief market analyst Chris Beauchamp.

“The resurgence in risk appetite looks to have legs, supported by stronger (or at least less bad) economic data, and any short-term weakness should probably be resolved in favour of the bulls in due course.”

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What to watch for today

The U.S. durable goods orders report is expected to show a drop of 1.7 per cent in February from January.

“Headline orders appear to have been dragged down by transport,” Capital Economics said.

“Boeing reported only five orders in February, down from 46 previously, pointing to a 30-per-cent month-over-month drop in commercial aircraft orders.”

Ticker

Telecom complaints rise

The fast pace of growth at Freedom Mobile has contributed to a spike in customers complaining about the regional wireless provider to Canada’s telecom ombudsman, Christine Dobby reports.

Trade to suffer

Global trade faces “strong headwinds” again this year and next after slower-than-expected growth in 2018, the World Trade Organization said today, forecasting 2019 will see volumes slow to a pace of 2.6 per cent from 2018’s 3 per cent. Said director-general Roberto Azevêdo: "With trade tensions running high, no one should be surprised by this outlook. Trade cannot play its full role in driving growth when we see such high levels of uncertainty. It is increasingly urgent that we resolve tensions and focus on charting a positive path forward for global trade which responds to the real challenges in today’s economy – such as the technological revolution and the imperative of creating jobs and boosting development.”

Analysts expect China’s central bank to act

Analysts expect the People’s Bank of China to soon cut the key cash reserve requirements among commercial banks, again, to support the financial system, Reuters reports.

Required Reading

Callidus sees deep loss

Lending firm Callidus Capital Corp. reported another deep quarterly loss and said its net worth had fallen below zero, due partly to the weak financial performance of a number of companies it has acquired. Jeffrey Jones reports.

Brexit woes

As Britain’s Parliament struggles to find a Brexit solution, the chaos surrounding the country’s departure from the European Union has begun to wreak havoc on the economy. Several car plants have begun temporary shutdowns to cope with potential disruptions and one of Europe’s largest discount airlines, EasyJet, said consumers have started holding back on buying tickets. Europe correspondent Paul Waldie looks at the troubles.

‘Price matters’

The flat yield curve everyone in finance is talking about these days is a gift to Canada’s newest online bank. Motusbank, brought to you by Ontario-based Meridian Credit Union, is a virtual bank that charges nothing for chequing accounts, pays a good rate on savings and has a unique offer on mortgages: All terms from one to five years have the same interest rate. Personal finance columnist Rob Carrick looks at the new bank.