U.S. rate hike expected to put pressure on Loonie

TORONTO -- The U.S. Federal Reserve's interest rate hike could exert downward pressure on the loonie in the midst of its steady drop in recent months as global oil prices have plunged.

See Full Article

The American central bank says it's lifting its key rate by a quarter-point to a range of 0.25 per cent to 0.5 per cent, ending a seven-year period of near-zero borrowing rates.

Scott Guitard, a portfolio manager at Fiduciary Trust Canada, said climbing American interest rates will likely mean the opposite for the Canadian dollar.

He also predicts Canada's central bank will stick with its decision to hold steady on its key lending rate even if the loonie falls further because of enduring low oil prices. The price of oil fell below $36 a barrel in mid-day trading.

Canada's central bank has cut its own key lending rate twice this year.

Prime Minister Justin Trudeau, speaking in advance of the announcement, said it was a good sign that the American economy was seeing a resurgence, but promised to examine the challenges that a lower dollar poses for the Canadian economy.

"I think having the United States economy pick up steam is ultimately going to be good for Canada," he said.

Trudeau added that a reinvigorated U.S. economy means more opportunities for Canadian companies selling their goods south of the border.

Speaking earlier this week, Bank of Canada governor Stephen Poloz said that Canadian and American interest rate policies will continue to diverge as the gap widens between their relative economic performance.

"We just want people to understand that usually we think of the Canadian economy following the U.S. economy fairly closely, and this will be one of those places where it really doesn't," he said.

James Marple, senior economist at TD Economics, called the the Fed move "relatively cautious and entirely achievable."



Advertisements

Latest Economic News

  • Why do you need a pet insurance, right here, right now

    Economic 24news
    Many Canadians would consider their pets as a part of their immediate, granular, family. Although some professionals think it’s not healthy, that’s the way life is in the twenty first century; There is a steep decline in the birth rate globally, with Japan leading the pack, and pets are filling in the void.
  • 'Explosive' U.S. oil output growth seen outpacing Saudis, Russia

    Economic CBC News
    U.S. oil production is booming and is forecast to top that of heavyweight Saudi Arabia and rival Russia this year, a global energy agency said Friday. The International Energy Agency said in its monthly market report that U.S. Source
  • Statistics Canada says manufacturing sales hit record high in November

    Economic CBC News
    Canadian manufacturing sales hit a record high in November, driven by sales of transportation equipment, petroleum and coal products and the chemical industry, Statistics Canada said Friday. The agency said manufacturing sales climbed 3.4 per cent to $55.5 billion. Source
  • Tilray inks deal with Shoppers Drug Mart to sell medical cannabis — if Feds give OK

    Economic CBC News
    Licensed marijuana producer Tilray Canada Ltd. has signed a deal to become a medical cannabis supplier to Shoppers Drug Mart. Subject to Health Canada's approval of Shoppers Drug Mart's application to dispense medical marijuana, Tilray will supply the retailer with Tilray branded medical cannabis products. Source
  • Amazon boosts monthly Prime membership fees by 20 per cent

    Economic CTV News
    NEW YORK -- Amazon is raising the price of its Prime membership monthly plan by nearly 20 per cent. The fee of US$99 for an annual membership will not change, the company said Friday. The online retailer had added the monthly payment option about two years ago as a way to hook shoppers -- especially during the holiday season -- who wanted faster free shipping, but didn't want to commit to an annual fee. Source
  • Manufacturing sales hit record high in November: Statistics Canada

    Economic CTV News
    OTTAWA -- Statistics Canada says manufacturing sales rose 3.4 per cent to a record high of $55.5 billion in November. The agency says the gain was mainly due to higher sales in the transportation equipment, petroleum and coal product and chemical industries. Source
  • Coke vows to cut waste over global 'packaging problem'

    Economic CTV News
    ATLANTA -- Recognizing a global waste problem, Coca-Cola will attempt to collect and recycle a bottle or can for every one that it sells within 12 years. CEO James Quincey says The Coca-Cola Co. Source
  • An Amazon HQ in Toronto makes sense — but what about Trump?

    Economic CBC News
    Amazon.com Inc's inclusion of Canada's largest city on a list of 20 finalists for a massive new campus could escalate tensions between the tech giant and U.S. President Donald Trump. Amazon said on Thursday that Toronto and 19 U.S. Source
  • Stocks rise despite looming U.S. government closure

    Economic CTV News
    HONG KONG -- Stock markets rose Friday as investors looked past the threat of a U.S. federal government shutdown and focused on a strong underlying economy. The price of oil fell on a report saying U.S. Source
  • Amazon rejection a wake-up call for Calgary's high-tech hopes

    Economic CBC News
    Considering Calgary's size, Jay Gohill didn't think his city had much of a chance to land Amazon's coveted second headquarters. For Gohill's tech company, it's probably a good thing. He's president of Arcurve, a software company with 65 employees in Calgary and Houston with clients in energy, transportation and health, among other industries. Source