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These are stories Report on Business is following Wednesday, Nov. 12, 2014.

Follow Michael Babad and The Globe's Business Briefing on Twitter.

How will oil affect Ottawa?
The Canadian government is expected today to outline the impact of plunging oil prices on its books when it releases its fiscal update.

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And when everything is added and subtracted, BMO Nesbitt Burns calculates, Ottawa "should be able to absorb the hit."

As The Globe and Mail's Bill Curry reports, Finance Minister Joe Oliver is expected to project  years of surpluses, though much of the money is already earmarked for tax cuts.

Mr. Oliver will unveil his update at a business gathering in Toronto.

Income splitting and changes to child care measures are forecast to cost the federal government $4.6-billion, net, by fiscal 2015-2016, BMO said today.

Nonetheless, expect to see a small deficit in the current fiscal year and a small surplus the year after.

"Recall that the fiscal year 2015-2016 surplus was last pegged at $6.4-billion, so recent measures will bite into most of it," said BMO senior economist Robert Kavcic.

"Oil prices are an additional question mark, and Ottawa is expected to address the impact of their recent slide in this fiscal update," he added, referring to the collapse.

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"We've estimated that the drop in oil prices will carve an additional $2-billion to $3-billion from revenues, but the $3-billion cushion and better-than-expected results coming out of fiscal year 2013-2014 should be able to absorb the hit, leaving a run of surpluses in place."

Observers don't expect much in the way of market reaction, by the way.

"These things are so well telegraphed in advance by way of pre-announcements and guidance that often little new materializes with the event itself so a clear market response is hardly a shoe-in particularly in the context of grander global forces affecting bond and [foreign exchange] markets," said Derek Holt, Frances Donald and Dov Zigler of Bank of Nova Scotia.

"For instance, the recent income-splitting announcement was estimated by the Parliamentary Budget Officer (Canada's version of the CBO in the U.S.) to shave the next five years of projected surpluses from about $10-billion per year to half that," they added.

"It is widely believed that additional measures are likely to be introduced in the lead-up to the October 2015 election."

Others also probe
Where the foreign exchange market is concerned, it ain't over 'til it's over.

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So far, regulators have hit five big banks to the tune of $3.4-billion (U.S.).

That included settlements with the U.S. Commodity Futures Trading Commission, Britain's Financial Services Authority and the Swiss regulator known as FINMA. The banks involved included UBS AG, Citigroup Inc., HSBC, Royal Bank of Scotland and JPMorgan Chase & Co.

Now, the Federal Reserve and the U.S. Justice Department are also reportedly investigating what's going on in the foreign exchange markets.

"The banking sector has taken a hit this morning as investors wearily start to price in the potential implications of the FX-rigging scandal," said market analyst Chris Beauchamp of IG in London.

"Today's co-ordinated action is just the beginning for the sector, as the U.S. Department of Justice takes an interest," he added.

"Given how long the Libor and PPI scandals have been  running, the FX story is going to be with us for an extended stay."

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Loblaw, Encana report
The earnings parade may be winding down, but some major companies are still reporting their third-quarter results.

Loblaw Cos. Ltd. today beat the estimates of analysts, though profit slipped to $142-million from $150-million while revenue popped 36 per cent to $13.6-billion given its recent acquisition of Shoppers Drug Mart.

Adjusted profit was 90 cents a share, topping the 87 cents expected.

Energy giant Encana Corp. posted a sharp jump in profit, to $2.8-billion from $188-million, after asset sales.

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