Dol­lar soft­ens on fall­ing oil prices, stock mar­kets quiet

Cape Breton Post - - CLASSIFIEDS / BUSINESS -

A pull­back in the price of crude pushed the Cana­dian dol­lar lower Mon­day, prompt­ing wor­ries the cur­rency may con­tinue to face down­ward pres­sure if oil prices stay range bound this year.

The loonie, which was trad­ing at its high­est lev­els in nearly five months last week, started the week on the soft side, tum­bling 0.35 of a U.S. cent to set­tle at 76.41 cents US.

A ma­jor con­trib­u­tor to the weak­ness was fall­ing oil prices, as the March crude con­tract fell 82 cents at US$53.01 per bar­rel — with global sup­ply and de­mand con­tin­u­ing to be in flux as ef­fects of a cut im­posed by OPEC and non-OPEC mem­bers take hold.

Craig Fehr, a Cana­dian mar­kets strate­gist at Ed­ward Jones in St. Louis, says he an­tic­i­pates oil prices to stay range bound this year, which will likely pull the Cana­dian cur­rency lower.

Another fac­tor that will neg­a­tively in­flu­ence the loonie will be the grow­ing gap be­tween in­ter­est rates in Canada and the U.S., he said, with as­sump­tions be­ing that growth will ac­cel­er­ate faster south of the bor­der.

But a lower Cana­dian dol­lar isn’t nec­es­sar­ily bad news for ev­ery­one.

“To the ex­tent that the loonie can stay low, stay where it is at the mo­ment or move a bit lower, that pro­vides a pretty pow­er­ful boost to the ex­port out­put par­tic­u­larly when it’s com­bined with faster growth and higher de­mand out of the U.S.,’’ Fehr noted.

In other com­modi­ties, March nat­u­ral gas was down a penny at US$3.05 per mmBTU, the April gold con­tract gained $11.30 at US$1,232.10 an ounce, and March cop­per was up four cents at US$2.65 a pound.

Mean­while, stock mar­kets on both sides of the bor­der were quiet in the ab­sence of any ma­jor eco­nomic re­leases or cor­po­rate earn­ings re­sults.

In Toronto, the S&P/TSX com­pos­ite in­dex fell 19.45 points at 15,456.94, with the losses in en­ergy par­tially off­set by gains in gold and ma­te­ri­als stocks.

On Wall Street, the Dow Jones in­dus­trial av­er­age dropped 19.04 points at 20,052.42, the S&P 500 slipped 4.86 points at 2,292.56, and the Nas­daq com­pos­ite de­clined 3.22 points at 5,663.55.

“In the short term, day-to-day, it’s go­ing to be more of what

“To the ex­tent that the loonie can stay low, stay where it is at the mo­ment or move a bit lower, that pro­vides a pretty pow­er­ful boost to the ex­port out­put par­tic­u­larly when it’s com­bined with faster growth and higher de­mand out of the U.S..” Craig Fehr

we’ve seen in the last week or two — up days fol­lowed by down days as we try to make sense of very solid fun­da­men­tals com­bined with what is an in­creas­ing amount of (U.S.) pol­icy un­cer­tainty in this en­vi­ron­ment,’’ said Fehr.

On Mon­day, nearly 100 tech com­pa­nies an­nounced they were push­ing back in court against U.S. Pres­i­dent Trump’s tem­po­rary travel ban, call­ing it un­con­sti­tu­tional, un-Amer­i­can and bad for the econ­omy.

The com­pa­nies filed briefs Sun­day to back law­suits from Wash­ing­ton state and Min­nesota fight­ing Trump’s travel tem­po­rary ban. The ban keeps refugees and trav­ellers from seven Mus­lim-ma­jor­ity coun­tries from en­ter­ing the U.S. for 90 days since be­ing en­acted Jan. 27. The 97 com­pa­nies are mostly in the technology in­dus­try and in­clude so­cial me­dia com­pa­nies Face­book Inc. and Twit­ter Inc. Non-tech com­pa­nies par­tic­i­pat­ing in­clude yo­gurt maker Chobani and jeans-seller Levi Strauss & Co.

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