Upon the release of the unchanged GDP report, the Canadian dollar declined against the US dollar, falling from its freshly minted thirty-year high. The lower-than-expected growth figure has deflated (no pun intended) the chance of a Bank of Canada rate hike at their coming July 10th meeting. However, interest rate futures remain hawkish, pricing in a chance of two hikes by year-end. The USDCAD was most recent quoted at 1.0611.
[B][U]Canadian Headlines[/U][/B]
Economic growth was static in Canada as its April GDP figure crossed the wires unchanged. Wholesale trade and manufacturing weighed on the report. In absence of those sectors, GDP would have grown 0.3% this month.
http://www.cbc.ca/money/story/2007/06/29/gdp.html
Source: [I]CBC[/I]
Despite a worker productivity increase of 50%, Canadian worker wages have not increased in 30 years. The Canadian Centre for Policy Alternatives released a report that said if Canadian workers got paid in proportion to their productivity, each worker?s salary would increase $10,000 annually.
http://www.canada.com/nationalpost/financialpost/story.html?id=d0496ec7-79a3-4549-88af-838d8292ab5c&k=52941
Source: [I]Financial Post[/I]
After reaching a thirty year high, the Canadian dollar fell to 94.17 US cents, dragged down by the unchanged Canadian GDP. The intraday 30 year high comes on built up pressure of higher energy prices and growing rate speculation.
http://www.bloomberg.com/apps/news?pid=20601082&sid=aEej8lgMTP5E&refer=canada
Source: [I]Bloomberg[/I]
[B][U]Canadian Markets[/U][/B]
[B]Currency[/B]
Upon the release of the unchanged GDP report, the Canadian dollar declined against the US dollar, falling from its freshly minted thirty-year high. The lower-than-expected growth figure has deflated (no pun intended) the chance of a Bank of Canada rate hike at their coming July 10th meeting. However, interest rate futures remain hawkish, pricing in a chance of two hikes by year-end. The USDCAD was most recent quoted at 1.0611.
[B]
Equity[/B]
As Canada approached a three day weekend, The Toronto stock exchange rallied for a gain of over 100 points. BlackBerry producer RIM led the advance with an 18% increase to $206.10 after announcing a 73 percent surge in first quarter profit and plans for a three-to-one stock split. The TSX energy sector played its role for the broad advance with a 1.2 percent move, encouraged by a move above $70/barrel oil prices. The S&P/TSX was most recently quoted up 131.57 points at 13,847.24.
[B]Fixed Income[/B]
The Canadian 10-yr continued its rise today as investors drafted US credit scares, products of Bear Stearns hedge fund fallouts and defaults on sub-prime mortgages. Pressure was taken off the yield today when Canada announced a static GDP. However, yield rebounds remain likely as interest rate futures continue to price in two rate hikes by year-end. The 10-yr was most recently quoted at 95.987.
