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These are stories Report on Business is following Tuesday, Feb. 24, 2015.

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Loonie swings
The Canadian dollar had something of a rocky day amid duelling speeches from central bankers.

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Federal Reserve chair Janet Yellen kicked it off this morning, setting the stage for higher interest rates in her semi-annual testimony to the Senate banking committee in Washington.

Bank of Canada Governor Stephen Poloz, speaking in London, Ont., reiterated that his surprise January rate cut was "insurance" but gave no new signal.

The Canadian dollar climbed after Mr. Poloz's comments, on a day that saw the currency swing by more than a penny by late afternoon, touching a low of 78.98 cents U.S. and a high of 80.13 cents.

Mr. Poloz had been expected to sound a "dovish" tone. But the signal that he sent, said chief currency strategist Camilla Sutton of Bank of Nova Scotia, was that "that one rate cut was insurance, and now they're in wait-and-see mode."

Some economists haven't changed their view, however, and still expect Mr. Poloz to cut his benchmark rate again, bringing it to just 0.5 per cent.

"The governor highlighted financial stability and uncertainty as key factors that need to be better gauged by central bankers," said senior economist Krishen Rangasamy of National Bank.

"Since it is very concerned about the impacts of the oil price collapse on financial stability in Canada, expect the BoC to continue erring on the side of caution for the next little while. In that regard, we think the central bank should take further 'insurance' by cutting interest rates again at its March meeting."

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Timing remains an issue, though, among those who still expect a second rate cut.

"We continue to believe that given the size of the negative shock on the economy, another rate cut will likely be needed," said Charles St-Arnaud of Nomura, though he ruled out that happening at next week's meeting.

"However, the timing of this cut will depend on incoming data, especially the price of oil, non-energy exports, signs that the weakness affects regions and sectors not linked to oil production and changes in household indebtedness."

BMO profit slips
It's this "unsettled environment" that's taking its toll on Bank of Montreal today.

BMO kicked off first-quarter earnings reports among Canada's big banks with a dip in profit that missed the estimates of analysts.

As The Globe and Mail's David Berman reports, this is setting up the banks for a troubling period.

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BMO profit fell 6 per cent from a year earlier, to $1-billion or $1.46 a share.

On an adjusted basis, profit fell 5 per cent to $1.53, falling about 10 cents shy of the estimates.

"BMO's first quarter results reflect the impact of an unsettled environment in which we saw significant movements in oil prices, long-term interest rates and the Canadian dollar," said chief executive officer Bill Downe.

Home Depot warns
You can look at this the other way around, too.

And that's from the viewpoint of American companies trying to cope with a stronger U.S. dollar.

Home Depot Inc., for example, warned today of the hit it will take.

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"If currency exchange rates remain where they are today, this would cause a negative impact to fiscal 2015 net sales growth of approximately $1-billion, as well as a negative impact on diluted earnings per share of 6 cents per share," the home improvement chain said as it posted a better-than-expected fourth-quarter report.

Home Depot reported a jump in profit to $1.4-billion (U.S.) or $1.05 a share, as sales climbed 8.3 per cent to about $19.2-billion.

It also unveiled a buyback of $18-billion.

The 'small crisis'
Greece now appears headed for a bailout extension after pulling back on some of its election pledges.

According to reports today, euro zone finance ministers spoke via phone and deemed a six-page document from Athens as good enough to start the ball rolling, approving the extension.

Certain election promises were scaled back so as not to whack its budget.

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"Particulars of the reform package have not been officially detailed, with only vague reports trickling out in the press to the effect that the list includes a crack-down on tax evasion and corruption in terms of Greek revenue-raising activities," said economists at Bank of Nova Scotia.

"On the other side of the ledger, Greece has apparently won approval to reduce the extent of its primary budget surplus," they added.

"The bottom line is that Greece seems to have gotten less than it may have hoped for but more than it had before by precipitating a small crisis in the euro zone. There is every reason to expect Greece, therefore, to continue stirring the pot every time that an opportunity presents itself."

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