Here are five things you need to know this morning:
Loonie taking a dip: The Canadian dollar is changing hands below 72 cents US this morning, a level the currency has not breached since May of 2020. It’s not hard to see why. The Bank of Canada cut its benchmark interest rate by 50 basis points last week to 3.75 per cent. That’s a full percentage point below the lower bound of the U.S. Federal Reserve’s rate, and there’s every reason to assume that gap is going to get wider in the short term, not tighter. That’s because the Bank of Canada is expected to keep cutting aggressively until it finds the so-called neutral rate somewhere in the two per cent range. But the outlooks for the economies of Canada and the U.S. are diverging right now, with the U.S. still flashing signs of strength with every indicator, while the Canadian data is much weaker. The Fed is still expected to cut several more times, but not at the same aggressive pace and likely not as far. That’s a recipe for a weaker Canadian dollar, which is what we’re seeing now.
Oil tumbles after Israeli retaliation: Oil prices are off as much as six per cent after Israel launched retaliatory strikes at Iran over the weekend, attacks that avoided targeting energy infrastructure. Brent is changing hands at around US$71 a barrel while WTI is below $68. Concerns over escalation of tensions in the region had added a geopolitical risk premium to crude for several weeks now, but if that’s dissipating, all that’s left is the supply and demand picture where the former is far outpacing the latter. Israel’s comparatively muted response “leaves the door to de-escalation and clearly the price action in oil this morning suggests the market is of the same view,” ING analysts Warren Patterson and Ewa Manthey said in a note.
Strike at Montreal port: Dockworkers at the Port of Montreal walked off the job for 24 hours on Sunday morning amid a labour dispute with their employer. The union representing nearly 1,200 longshoremen at Canada’s second biggest port walked off the job at 7 a.m. Sunday morning, save for certain types of operations. The move comes on top of an ongoing refusal to work any overtime, and a three-day strike at two container terminals which ended earlier this month. The two sides are trying to hammer out a deal but remain at an impasse after 35 rounds of mediation talks since the summer of 2023.
Boeing raises US$19B to stave off downgrade: Planemaker Boeing Co. has launched a share sale to raise nearly US$19 billion this morning, one of the largest equity raises ever by a public company. The company is watering down existing shareholders by the record amount in a bid to improve its leaky liquidity and stave off a credit rating downgrade that would render its debt to junk status. The company is planning to sell 90 million new shares and raise about $5 billion of depository shares. If overallotments are all filled, the total price tag could be as high as $21.8 billion.
Conservatives pledge to remove sales tax on new homes under $1M: Conservative leader Pierre Poilievre says he would remove the five per cent national sales tax charged on new homes under $1 million if he’s elected Prime Minister, Bloomberg reports. Poilievre is set to speak to reporters in Ottawa today to outline the plan, which is targeted at buyers struggling to get into the market amid worsening affordability. Housing is expected to become a key topic in the next federal election which is scheduled to happen at some point between now and October 2025.