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Angela Merkel not sure euro zone can work (Now she tells us)

These are stories Report on Business is following Wednesday, July 18, 2012.

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Now she tells us
Germany's Angela Merkel says she's optimistic the euro zone can be saved, but she's not so sure of that.

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In an interview posted on the website of the chancellor's Christian Democratic Union today, Ms. Merkel said the leaders of the European project have to keep at it, but her comments raised eyebrows in the markets, pressuring the common currency.

"We have of course not yet organized the European project in such a way that we can be sure it will work, work well," Ms. Merkel said. "That means we need to keep working on this. We have much to do, but I am optimistic that we will succeed."

The nations of the 17-member euro zone have struggled for more than two years to come to grips with a crisis that has sent shockwaves around the world, upsetting markets, hurting other economies and eroding the profits of some companies.

Several countries have been bailed out, and the countries of the euro zone have pumped billions into saving the still young currency union.

"Euro has retraced some of yesterday's gain and is entering the North American session, down 0.3 per cent against the U.S. dollar after Angela Merkel suggested she has some doubt that the European project will work," said senior currency strategist Camilla Sutton of Bank of Nova Scotia.

Agrium boosts projections
Canada's Agrium Inc. boosted its earnings forecast today, citing strong demand.

The agricultural products giant said it now expects earnings per share of between $5.40 (U.S.) and $5.50 for the second quarter and $6.72 to $6.82 for the first half of the year.

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That's about 15 per cent better than its earlier second-quarter project, and, the company said, would mark record profit for the second quarter and the first half.

"The increase in expected earnings is due to excellent results across our entire crop input business, resulting from the continuation of robust demand through June, despite the very early start to the spring season," said chief executive officer Mike Wilson.

"As a result, the second quarter EBITDA for all three business units is expected to be higher than the same period last year. The outlook remains very positive, supported by the significant increase in grain and oilseed prices globally due to adverse weather in the U.S. and an expected tightening in international crop input markets."

Agrium reports second-quarter results Aug. 2.

Carney, round two
Watch for the release at 10:30 a.m. ET today of the Bank of Canada's monetary policy report, which will put some flesh on the bones of the central bank's policy statement yesterday.

Governor Mark Carney and his colleagues on the central bank's policy panel held their benchmark overnight rate at 1 per cent and trimmed their forecast for economic growth this year and next. They also suggested that the next move in interest rates would be up, not down, but that won't be any time soon.

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Today's report will look at the reasons for the lower projection, and projections in other areas.

The central bank remains concerned by the euro crisis.

"Today sees the full monetary policy report from the BoC (watch for the detailed quarterly pattern on growth and, particularly, inflation as yesterday's statement suggested that headline inflation could fall well below 2 per cent for a period)," said Mark Chandler and Ian Pollick of RBC Dominion Securities.

"In the subsequent press conference, Governor Carney will likely be fielding questions (again) on the state of the housing market, the impact of new mortgage measures and the persistent strength of the Canadian dollar in the face of softer commodity prices."

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About the Author
Report on Business News Editor

Michael Babad is a Report on Business editor and co-author of three business books. He has been with Report on Business for several years, and has also been a reporter and editor at The Toronto Star, The Financial Post and United Press International. His articles have appeared in major newspapers around the world. More


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