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	Editors Column

Central Bank Watch -

Will the Bank of Canada cut on Dec 4? The Bank of Canada meets on December 3rd and 4th next week to deliberate and to deliver the Central Bank’s latest monetary policy decision (Tuesday the 4th). This is arguably the most important policy decision in 18 months as much has changed since the Bank last met in early October. Inflation has slowed with the Bank’s preferred core rate falling to 1.8% in October, the slowest rate of inflation since June 2006. The headline rate also slowed, to 2.4% from 2.5% in September. Inflation is now lower in Canada than in the US and with the Fed in an easing cycle, the Bank of Canada is expected to follow suit, albeit in a less aggressive manner than the Fed. The key question is whether the Bank of Canada will move to cut rates now or wait until early 2008. Recent economic data may well make the decision somewhat less painful for the Bank and it will be something of a surprise to me if rates are not cut next week. Underlying fundamental data points to some deterioration in the Canadian economy: retail sales in quarter 3 recorded the first quarterly decline since the final quarter in 2003; exports have dropped significantly over recent months, particularly for durable goods and in September the economy’s trade balance narrowed to its lowest level in 4 years; manufacturing shipments are falling consistently with outlook bleak as new orders are falling at a sharpened rate; GDP for quarter 3, reported later this week, is expected to print at an annualised 2.3% rate, down substantially from the 3.4% rate recorded in quarter 2 and the 3.9% reported for quarter 1. On top of this we have a scenario where the neighbouring US economy is slowing and is expected to slow further, hardly good news for the export-oriented Canadian economy, where 80% of all exports go to the US. To round it off we have the Canadian dollar still trading 20% higher on the year against its US counterpart, which is taking a huge slice off corporate profits and rendering many Canadian manufacturers and exporters uncompetitive or redundant. The global economy too is showing distinct signs of weakness and the idea that a commodity-rich Canada can flourish while the country’s major trading partners sink is far-fetched. The time is nigh for the Bank of Canada and it is pointless them using the record tight labour market in Canada to adopt a wait and see approach. Labour is a lagging indicator, but jobs will be shed very quickly when things turn nasty, and the undercurrents already suggest the screw is turning. By acting now the Bank of Canada will demonstrate they are thinking proactively, while a cut should also mean some further correction in the value of the loonie and at least allow Canadian producers compete at a fairer exchange level on international markets. Governor David Dodge has complained that Canada has had to carry too much of the burden of a weakened US dollar, but the way to right this wrong is to help drive the Canadian currency to a more realistic value level. While currency valuation is not the policy imperative of the Bank of Canada, currency manipulation on the part of the speculators that have placed Canada’s economy at risk should be. In any event, aside from the risks posed by a strong Canadian dollar, recent domestic data in Canada points to an economy which is slowing, an inflation risk which is slowing and increasing external risk from growing uncertainty in the US and global economies. Why wait? Forecast: Bank of Canada to cut the key interest rate from 4.5% to 4.25% on December 4. Donal Keane – Nov 26

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Latest news:

Canadian Employment Falls 5k in June, Unemployment Rate Up to 6.2% CEP News (Jul 11 - 11:00 GMT)

Canadian employment was virtually unchanged between June and May with 5,000 fewer jobs as part-time job gains mostly offset full-time job losses, Statistics Canada reported Friday. read

May building permits rise unexpectedly

Reuters (Jul 7 - 12:36 GMT)

The value of Canadian building permits unexpectedly rose 1.1 percent in May from April, staying at their highest level since October despite a softening in the housing sector, Statistics Canada said on Monday. read

Canadian dollar ends session, and week, lower

Reuters (Jul 4 - 22:00 GMT)

The Canadian dollar limped to a lower close versus the U.S. dollar on Friday and capped off its first losing week in three after a thin, quiet session in which moves were amplified because U.S. markets were closed for Independence Day. read

Canada's Ivey index rises more than expected

Reuters (Jul 4 - 14:20 GMT)

Canadian business purchasing activity increased more than expected in June and at a faster pace than the previous month, according to the Ivey Purchasing Managers Index released on Friday. read

Canada's Dollar Falls on Concern Higher Fuel Prices Hurt Growth

Bloomberg (Jul 1 - 01:00 GMT)

Canada's dollar fell the most in almost a month on concern that growth in the world's eighth- largest economy will slow as consumers cut spending amid rising gasoline prices. read

Looking for the long-term value in the economy's Great Divide

Vancouver Sun (Jun 30 - 09:42 GMT)

Investors are getting a great deal of conflicting advice while trying to minimize risk and maximize returns read

All quiet on the loonie front ahead of Fed announcement

Ottawa Business Journal (Jun 24 - 01:00 GMT)

The Canadian dollar advanced against the U.S. dollar Monday morning after losing ground to the greenback in overnight trading. read

Canada's Inflation Rate Pops To 2.2% In May; Core Rate Steady

CEP News (Jun 19 - 11:00 GMT)

Soaring energy prices pushed Canada's headline inflation rate to 2.2% in May, Statistics Canada reported Thursday. The core rate stayed steady at 1.5%.
read

Foreigners in April Bought Most Canada Securities in 17 Months

Bloomberg (Jun 17 - 12:30)

International investors increased their holdings of Canadian securities in April, led by provincial government and private-sector bonds. read

Canadian Dollar Rises To 6-day High Against US Currency

RTT News (Jun 17 - 08:11 GMT)

Extending Asian session's uptrend, the Canadian currency climbed to a 6-day high against the US dollar in early European deals on Tuesday. read

Strength of Canada dollar link to oil price tested

Reuters (Jun 12 - 11:36 GMT)

Is the Canadian dollar actually a petrodollar or is its link to record-high oil prices tenuous and temporary? read

Canada Dollar Slump May Slow as Bank Turns Focus to Inflation

Bloomberg (Jun 11 - 09:15 GMT)

The slumping Canadian dollar may get a reprieve as the Bank of Canada shifts focus from economic growth to fighting inflation. read

Carney May Cut Canada Rate, Then Pause Alongside King, Bernanke

Bloomberg (Jun 10 - 11:37 GMT)

Bank of Canada Governor Mark Carney will probably lower interest rates again today and signal the cut will be the last for some time, bringing policy into line with counterparts in the U.K. and U.S. read

Canada's Dollar Posts Longest Slump in Three Years on Rate

Bloomberg (Jun 9 - 21:30 GMT)

Canada's dollar fell for a seventh day, its longest losing streak in three years, as economists forecast the central bank will cut borrowing costs tomorrow to avoid a recession in the world's eighth-largest economy. read

Balancing act tests Bank of Canada

The Star (Jun 9 - 11:15 GMT)

All eyes will be on the Bank of Canada tomorrow as it tackles a conundrum that is confounding central banks around the world. read

Canadian Job Creation Slows in May; Unemployment Rate Holds At 6.1%

CEP News (Jun 6 - 11:00 GMT)

A jump in part-time employment provided Canada with a net gain of 8,400 jobs in May, Statistics Canada reported Friday. The unemployment rate stayed steady at 6.1%. read

Canadian Building Permit Approvals Hit Highest Value Since October 2007

CEP News (Jun 5 - 12:30 GMT)

The value of building permits rebounded in April, rising 14.5% over March to $6.4 billion as construction intentions rose in all provinces and both residential and non-residential sectors, Statistics Canada reported Thursday. read

Loonie falls as U.S. warns of inflation

Calgary Herald (Jun 4 - 08:25 GMT)

The dollar ended at a three-week low Tuesday after an inflation warning by the head of the U.S. Federal Reserve -- indicating there will not be any further interest rate cuts there. read

U.S. Slump Spreading To Canada?

Forbes (Jun 3 - 10:30 GMT)

The Canadian economy continues to be a story in contrasts. There has been a significant improvement in terms of trade, which is boosting nominal income growth, but manufacturing output is contracting due to the strong Canadian dollar ("loonie") and slumping U.S. market. read

Canadian dollar rattled by talk of BOC rate cut

Reuters (Jun 2 - 21:30 GMT)

The Canadian dollar fell nearly 1 percent versus the U.S. dollar on Monday as talk of a Bank of Canada rate cut picked up steam following the unexpectedly weak gross domestic data released late last week. read

Canada's Economy Unexpectedly Shrank in First Quarter

Bloomberg (May 30 - 12:52 GMT)

Canada's economy unexpectedly shrank between January and March for the first quarterly drop in almost five years, giving the Bank of Canada more reason to cut borrowing costs again next month. read

Oil bubble will burst

Calgary Herald (May 28 - 22:00 GMT)

Mr. Hall, deputy chief economist for Export Development Canada, predicts that a slowdown affecting 60 per cent of the world’s economy will push down the price of oil by as much 40 per cent. read

Strong Canadian dollar adds muscle to TSX

Calgary Herald (May 26 - 11:19 GMT)

The influx of international interest in Canada has skewed the TSX's gains heavily toward its energy shares, striking profit envy among some long-time blue-chip stock holders, observers say. read

Canadian Dollar Falls as Stock Declines Discourage Investors

Bloomberg (May 23 - 13:15 GMT)

Canada's dollar fell the most in more than two weeks as global stocks declined. read

Canada snow makes retail growth lukewarm in March

Reuters (May 22 - 12:42 GMT)

Heavy snowfall at the end of the Canadian winter dampened March retail sales, which clawed up just 0.1 percent despite gains in the heavyweight auto sector, Statistics Canada said on Thursday. read

The Consumer Price Index (CPI) rose 1.7% between April 2007 and April 2008

The Daily (May 21 - 11:05 GMT)

Consumer prices accelerated for the first time in six months in April in the wake of higher gasoline prices and fewer incentives on passenger vehicles. read

Canadian Dollar Gains After March Wholesales Sales Increase

Bloomberg (May 20 13:12 GMT)

The Canadian dollar rose after a government report showed wholesale sales increased in March. read

Soaring oil not loosening parity's grip

ReportonBusiness.com (May 20 - 11:08 GMT)

The Canadian dollar has been sticking to the U.S. dollar as if they were glued and not even the hot oil markets have been able to provide the heat needed to put an end to parity and send the loonie higher. read

Morning Market Recap: Canadian Dollar at Two-Month High

CEP (May 19 - 13:40 GMT)

Markets have had little to digest on Monday with Canadian markets closed for Victoria Day and only minor data in the U.S. and overseas. The Treasury curve is firm and slightly steeper while the Canadian dollar is at a two-month high. read

Factory slump underlines recession fears

The Gazette (May 16 - 08:58 GMT)

The Canadian economy may have already slipped into recession, an analyst with a major investment bank warned yesterday in the wake of news of a much-steeper-than-expected drop in the flow of goods out of Canadian factories at the end of the first quarter of the year. read

Canadian Dollar Close to an Eight-Week High as Oil, Gold Surge

Bloomberg (May 15 - 16:25 GMT)

Canada's dollar strengthened against 13 of the 16 most- active currencies as crude surged after UBS AG and Sanford C. Bernstein & Co. raised their 2008 price forecasts to reflect the 30 percent gain in oil since the start of the year. read

Greenback and loonie joined at the hip since last September

Daily Commercial News (May 15 - 08:38 GMT)

From January 2003 to September 2008, the Canadian dollar increased in value by slightly more than 50% versus the U.S. dollar. The inverse was that the U.S. dollar dropped in value by about one-third versus the Canadian dollar. read

Canada's Dollar Reaches Two-Month High as Oil Surges to Record

Bloomberg (May 13 - 22:00 GMT)

Canada's dollar rose, touching the highest in almost two months, after oil futures surged to a record high, bolstering prospects for the nation's exports. read

Grim data forecast for manufacturing

Calgary Herald (May 12 - 11:18 GMT)

Canada's manufacturing recession has deepened, and will likely continue to do so, reports being released here and in the United States this week are expected to suggest. read

Construction Sector Helps Build Canadian Job Growth in April

CEP News (May 9 - 11:11 GMT)

The Canadian economy added 19,200 net new jobs in April, with construction and hospitality industries leading the way, according to the monthly Labour Force Survey released Friday by Statistics Canada. read

Loonie headed for a steep fall, poll forecasts

Financial Post (May 8 - 02:00 GMT)

The Canadian dollar's stint near par with the U.S. dollar is nearing a close, and it will now steadily fall as the Bank of Canada cuts interest rates and the domestic economy slows, a Reuters poll forecast on Wednesday. read

Dollar climbs with high-flying crude to boost TSX stocks

The Star (May 7 - 09:30 GMT)

Oil and gas companies led the way up for the Toronto Stock Exchange yesterday, helping the main index climb about 1 per cent as crude oil prices notched another record high. read

Canadian dollar pushes higher on commodities

Reuters (May 5 - 10:02 GMT)

The Canadian dollar pushed higher against a broadly weaker U.S. dollar on Monday, boosted by robust commodity prices, while domestic bond prices ended lower. read

Canada's Dollar Falls the Most in 6 Weeks on Outlook for Rates

Bloomberg (May 1 - 21:00 GMT)

The Canadian dollar fell the most in more than six weeks on speculation the weakening economy will force the central bank to further cut borrowing costs as the U.S. Federal Reserve may stop reducing its key rate. read

Strong dollar nibbles away at GDP

Globe and Mail (May 1 - 08:25 GMT)

The economy unexpectedly shrank in February, providing a glimpse of what's in store in the months ahead: little or no growth. read

Canadian dollar, bonds edge higher ahead of Fed

Reuters (Apr 29 - 21:19 GMT)

The Canadian dollar edged higher against the U.S. currency on Tuesday, but stayed in a close range as investors looked ahead to a key interest rate decision by the U.S. Federal Reserve. read

Economy stalling: Carney

Toronto Star (Apr 25 - 09:44 GMT)

Acknowledging that the economic storm sweeping North America is worse than expected, the Bank of Canada said yesterday that the Canadian economy is sagging and won't recover fully until 2010. read

Canadian economy resilient,no budget gap-finmin

Reuters (Apr 24 - 10:43 GMT)

Canada's economy can withstand a deeper U.S. slowdown with only a minor impact on growth and can maintain a budget surplus in the current fiscal year, Finance Minister Jim Flaherty said on Wednesday. read

Canada's Dollar Falls to the Lowest in a Week as Sales Decline

Bloomberg (Apr 23 - 20:35 GMT)

The Canadian dollar fell to the lowest level in more than a week after a government report showed retail sales unexpectedly declined in February, fueling speculation the central bank will cut interest rates further. read

February Chill Hits Canada's Retail Sector, Sales Fall 0.7%

CEO News (Apr 23 - 12:30 GMT)

Canada's retail sector slipped into negative territory in February, with seasonally adjusted sales down 0.7% from the month before to $35.5 billion, Statistics Canada reported Wednesday. read

Canadian dollar falls on rate-cut expectations

Reuters (Apr 21 - 19:41GMT)

The Canadian dollar closed lower versus the U.S. dollar on Monday as the likelihood of a Bank of Canada rate cut and a dovish bank statement more than offset the benefit of record high oil prices. read

Deep rate cut tests banks' patience

Globe and Mail (Apr 21 - 11:36 GMT)

There's no doubt the Bank of Canada will cut its key interest rate tomorrow from today's 3.5 per cent. A cut has been well telegraphed by senior officials at the bank; read

Canadian dollar falls on weak data as rate cut looms

Financial Post (Apr 17 - 22: 59 GMT)

The Canadian dollar closed lower versus the U.S. dollar on Thursday, handing back more than half Wednesday's gains as weak inflation data solidified expectations of a 50-basis-point interest rate cut from the Bank of Canada next week. read

Canada CPI declines for 4th consecutive month

The Daily (Apr 17 - 12:28 GMT)

Consumer prices rose 1.4% on average in the 12 months to March 2008, the fourth consecutive month in which the rate of growth has decelerated. This was the slowest rate of growth since January 2007. read

Canada dollar rises 1.6 pct on oil, weak greenback

Reuters (Apr 16 - 15:44 GMT)

The Canadian dollar climbed 1.6 percent against the U.S. dollar on Wednesday, boosted by record high oil prices and a weaker greenback. read

Business Outlook Chills

Financial Post (Apr 15 - 08:40 GMT)

Canadian businesses are bracing for the worst sales environment since the downturn of 2001 as they navigate through declining exports, tighter credit conditions, a strong currency and rising energy costs. read

Credit crisis still impacting Canadian economy: Bank of Canada

Canadian Press (Apr 10 - 17:02 GMT)

Bank of Canada says its past and future actions in response to financial market turbulence are focused on buffering the Canadian economy from shocks, not sheltering financial institutions and investors from their poor choices. read

Canadian Dollar Trades Lower

Howe Street (Apr 9 - 16:00 GMT)

The Canadian dollar is trading at a one-week low this morning as it grinds down toward the lower end of its five-month trading range. read

Ontario Non-Residential Sector Pushes Canadian Building Permits Down 1%

CEP News (Apr 7 - 12:36GMT)

A decline in the number of non-residential permits sought by Ontario builders dragged down Canada's overall building permit totals to a 1% decline compared to January. read

Canadian Job Growth Slowed, Unemployment Rate Edged Up in March

CEP News (Apr 4 - 12:00GMT)

The Canadian economy added 14,600 jobs in March, but a wave of new entrants into the labour market pushed the unemployment rate up 0.2 percentage points to 6%, Statistics Canada reported Friday. read

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