After yesterday?s quarter of a percent rate hike by the Bank of Canada, the Canadian dollar retreated from thirty year highs. Post decision remarks by Governor Dodge indicated a slowing possibility of further rate increases.
Following Alcoa?s $27 billion bid, Rio Tinto is reportedly preparing a new $34 billion bid for Alcan Inc. In a recent filing with the SEC, Alcan stated it has "undertaken negotiations concerning potential strategic transactions and alternatives to the Alcoa offer."
http://www.cbc.ca/money/story/2007/07/11/alcanbids.html[I]Source: CBC[/I]
The C.D. Howe Institute released a report stating that Ontario is the most heavily taxed province, making it the most expensive province to operate a business in. Ontario, as well as other provincial governments, is looking into tax cuts and credits to attract more business.
http://www.canada.com/nationalpost/financialpost/story.html?id=6c215a01-ed4d-4cc2-bbd3-55daa8629d5d&k=92282
[I]Source: Financial Post[/I]
As the temperature drops around the United States, Canadian natural gas producers may lose business from declining demand in power-plant fuel. Midwest United States? demand for air-conditioning, accounting for a large percentage of Canadian exports, is expected to decline by 40 percent this Friday.
http://www.bloomberg.com/apps/news?pid=20601082&sid=am9ZvD8avepI&refer=canada
[I]Source: Bloomberg[/I]
[B]Currency Markets: USD/CAD
[/B]After yesterday?s quarter of a percent rate hike by the Bank of Canada, the Canadian dollar retreated from thirty year highs. Post decision remarks by Governor Dodge indicated a slowing possibility of further rate increases. Dodge?s dovish rhetoric included language such as “modest further increase in the overnight rate may be required.” As hawkish speculation faded, interest rate futures trimmed down chances of another Bank of Canada rate hike. The USDCAD was most recently quoted at 1.057.
[B]Equity Markets: S&P/TSX[/B]
The S&P/TSX fell today, led by a 0.5 percent decrease in the energy sector. As oil prices declined, energy companies Canadian Natural and TransAlta dropped 42 cents and C$1.42 respectively. Moderating the decline, Alcan tacked on C$1.30 as a possible $34 billion dollar bid materialized from mining giant Rio Tinto. The S&P/TSX was most recently quoted down 34.37 points at 14,097.56.
[B]Fixed Income: Canadian 10-Year Government Bond[/B]
The 10-year government bond was bolstered today, as investors world-wide continued to flock to safer investments as S&P and Moody?s re-rated billions of dollars worth of sub-prime backed debt. Re-evaluation from bond raters was a reaction to homeowners defaulting on loans when borrowing prices increased. The 10-year government bond was most recently quoted up at 95.58.
