The Canadian dollar continues to hold near highs it hasn?t seen since the mid 1970?s. Surging oil prices are strengthening the Canadian dollar, as job growth in Albert?s oil sands picks up pace, as suggested by Friday?s employment report. The Bank of Canada is looking to control the above target inflation rate, and is widely expected to hike rates tomorrow.
As the Bank of Canada?s policy meeting approaches, Friday?s positive employment data may only add to the central bank?s already hawkish position. Canada?s labor market hired an additional 35,000 workers in June, almost double what analysts forecasted.
http://www.cbc.ca/money/story/2007/07/06/unemployment.html[I]Source: CBC [/I]
The International Energy Agency (IEA) predicted an oil supply crunch by the year 2012 as the demand for oil is growing at a faster pace than oil production.
[http://www.canada.com/nationalpost/financialpost/story.html?id=c2b60971-820d-4b3c-a966-49479c69847b&k=24514
Source: Financial Post](http://www.canada.com/nationalpost/financialpost/story.html?id=c2b60971-820d-4b3c-a966-49479c69847b&k=24514 Source: Financial Post)
[I]Source: Financial Post[/I]
Canadian exporters and unions warn that a rate hike by Governor Dodge could send the Canadian dollar into parity with the United States dollar. With the prospect of a quarter of a point increase in the overnight lending rate, businesses are concerned a stronger Canadian dollar will weigh down exports.
Bloomberg - Are you a robot?
[I]Source: Bloomberg[/I]
[B]Currency Markets: USD/CAD[/B]
The Canadian dollar continues to hold near highs it hasn?t seen since the mid 1970?s. Surging oil prices are strengthening the Canadian dollar, as job growth in Albert?s oil sands picks up pace, as suggested by Friday?s employment report. The Bank of Canada is looking to control the above target inflation rate, and is widely expected to hike rates tomorrow. There is speculation that this could send the Canadian dollar to near parity with the US dollar. However, if the Bank of Canada does not raise rates tomorrow as expected or signals a neutral tone in their policy statement, USDCAD could see a pull back to prices as high as 1.0800. The pair was most recently quoted at 1.0469.
[B]Equity Markets: S&P/TSX Index[/B]
The S&P/TSX index followed the Canadian dollar higher. Index leaders included Cogeco Cable Inc., up $1.13 on the release of a 65 percent increase in earnings and a 33 percent dividends increase. Meanwhile, Petro-Canada, gained 16 cents on high oil contracts. The mining sector also moved higher, led by Teck Cominco?s 46 cent gain. The S&P/TSX was most recently quoted up 42.27 points at 14,160.97.
[B]Fixed Income Market: Canadian Government 10-year Bond
[/B]Although the Canadian 10-yr was little changed today, a pending rate decision could push yields higher. Interest rate futures have almost completely priced in a rate hike by the Bank of Canada tomorrow and possibly an additional hike by year end. The Canadian 10-year government bond edged down to its most recently quoted price at 94.970, yielding 4.69 percent.