Liquidity turmoil breached Canadian borders, spurring a sell off in the Canadian dollar. Canada?s Coventree Inc., along with 16 other funds that issue asset backed debt, found themselves struggling to rollover debt valued at C$27 billion. Liquidity crunches mixed with recent equity market volatility have been enough to incite carry traders to unwind their risky positions, weighing down higher yielding currencies such as the Canadian dollar.
[B]US Consumers Feeling the Pressure[/B]
Fresh signs emerged Tuesday that consumers are spending a little more cautiously, as a pair of big retailers both reported business slowdowns. Wal-Mart lowered its profit expectations from continuing operations for the year to a range of $3.05 US to $3.13 US a share. That’s a drop of 10 cents US from its previous outlook.
[B]Canada[/B][B] Talks with Banks on Liquidity[/B]
Canada’s financial authorities have had “fulsome discussions” with the country’s banks to ensure adequate liquidity in the markets, Finance Minister Jim Flaherty said on Tuesday. Speaking as problems emerged this week over Canadian asset-based commercial paper, Flaherty told Reuters that Canada was not immune to market fluctuations but it was important that orderliness and liquidity be preserved.
[I]Source: Financial Post[/I]
[B]Canadian Factory Shipments Fall Third Straight Month[/B]
Canadian factory shipments fell for a third month in June, as manufacturers in the world’s eighth- largest economy struggled with a strong currency. New orders fell to their lowest since January. Shipments slid 1.8 percent to C$48.6 billion ($45.1 billion), after a revised 0.2 percent drop in May, Statistics Canada said today in Ottawa. Economists forecast a 0.2 percent decline, the median of 19 estimates in a Bloomberg News survey.
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[I]Currency Markets: USDCAD[/I]
Liquidity turmoil breached Canadian borders, spurring a sell off in the Canadian dollar. Canada?s Coventree Inc., along with 16 other funds that issue asset backed debt, found themselves struggling to rollover debt valued at C$27 billion. Liquidity crunches mixed with recent equity market volatility have been enough to incite carry traders to unwind their risky positions, weighing down higher yielding currencies such as the Canadian dollar. Additional bad news for the Loonie was found in Canada?s dour fundamentals as factory shipments dropped 1.8 percent versus the 0.2 percent expected, which followed yesterday?s international trade report, declining to 5.3B versus the 5.5B expected. The USDCAD rebounded back to prices last seen in May, trading at its most recently quoted price of 1.0737.
[I]Equity Markets: S&P/TSX Index[/I]
After shaving off 184.83 points or 1.4 percent yesterday, the S&P/TSX pulled into positive territory in early morning trading. Rising crude oil prices buoyed energy companies Canadian Natural Resource, up C$1.00, EnCana Corporation, up 75 cents, and [B]Petro-Canada, up 65 cents. Zinc producer Teck Cominco moderated the index?s gains as the falling price of zinc dragged its share prices down 71 cents to C$41.39. The S&P/TSX was most recently quoted up [/B]53.07 points at 13,295.69. [B] [/B]
[I]Fixed Income Markets: Canadian Government 10-Year Bonds[/I]
Government bond prices fell as investors regained confidence. Toronto?s stock exchange provided investors with a sign of stability as the benchmark rose modestly. Investors put their liquidity concerns on hold and jumped into the equity market in an attempt to take part in the newly found equity profits. The 10-year government bond was most recently quoted at 96.425, yielding 4.45 percent.