The Canadian dollar traded flat going into Monday morning, struggling to stay afloat above the 1.0600 level. On Friday, the Canadian dollar rallied as the Federal Reserve cut its discount rate by 50 basis points. The Fed?s move to stabilize the equity markets lowered the appeal of the US currency, sending the Canadian dollar almost 100 pips higher against the greenback.
[B]September Rate Hike No Longer in Cards, Economists Say[/B]
Until recent days, an increase was widely expected on Sept. 5, the central bank’s next regular announcement date. But the U.S. Federal Reserve Board announced an interest rate cut on Friday, and the week’s wild market ride seemed to rule out an immediate increase in Canada.
[B]CIBC Assures Market of Limited Subprime Exposure[/B]
CIBC said Monday it had about $1.7 billion US in exposure to the U.S. residential mortgage market before write downs, less than 60 per cent of that tied to subprime mortgages. “The majority of the $1.7-billion US exposure continues to be AAA-rated, the highest rating category,” said the bank in a statement estimating its upcoming third-quarter results. "The exposure has been mitigated by subprime index hedges of approximately $300 million US."
[I]Source: Financial Post[/I]
[B]National to Buy Back C$2 Billion in Commercial Paper[/B]
National Bank of Canada, the country’s sixth-largest bank, agreed to buy back C$2 billion ($1.89 billion) of asset-backed commercial paper from clients after a global credit crunch froze the commercial paper market in Canada. The Montreal-based bank said it will purchase commercial paper held in money-market mutual funds managed by National Bank and Altamira, and pooled funds owned by units of the bank, according to a Market Wire statement today. The bank will pay cash, offering 100 percent of the acquisition cost plus interest.
Bloomberg - Are you a robot?
[I]Currency Markets: USDCAD[/I]
The Canadian dollar traded flat going into Monday morning, struggling to stay afloat above the 1.0600 level. On Friday, the Canadian dollar rallied as the Federal Reserve cut its discount rate by 50 basis points. The Fed?s move to stabilize the equity markets lowered the appeal of the US currency, sending the Canadian dollar almost 100 pips higher against the greenback. The absence of direction in the Canadian currency will be compensated for tomorrow as the release of CPI and retail sales are expected to throw the pair into gear. The USDCAD was most recently traded at 1.0578.
[I]Equity Markets: S&P/TSX Index[/I]
The S&P/TSX index moved near a 100 point advance in early morning trading as rising gold and base metal prices helped boost the mining sector. Gold producers Barrick Gold and Goldcorp were up 70 cents to C$33.13 and up 63 cents to C$23.61 respectively. Aluminum producer Alcan jumped 88 cents to C$101.14. The energy sector limited gains as oil prices dropped on Hurricane Dean?s projected miss of US oil refineries in Texas. Suncor Energy Inc. fell C$1.41 to $90.15 and EnCana Corporation lost 72 cents to C$61.48. During the past few weeks, the worldwide credit turmoil has lopped off 10.9 percent of the Canadian equity index, what some traders call a “correction” in the market. The S&P/TSX was last quoted up 52.41 points at 13,101.99.
[I]Fixed Income Markets: Canadian 10-Year Government Bond[/I]
Canadian government bonds gain as investors continue to look for stability in the markets. Despite the TSX posting early morning gains, the index continues to decline, approaching another negative close. Traders are still worried that markets have not reached a “bottom,” trying to determine the extent of damages stemming from the US subprime crisis. The 10-Year Canadian Government Bond was last trading at 96.970, yielding 4.38 percent.