Here are five things you need to know this morning:
How low can the loonie go? The loonie has fallen to its lowest level since 2020 and there’s every reason to think we are nowhere near the bottom. That’s the consensus among the experts we’ve spoken to this week, as the Canadian dollar is changing hands at 71.80 cents US this morning, its lowest level in four years. Adam Button, chief currency analysts at ForexLive, told The Street yesterday that a 70-cent loonie is absolutely on the table in the next few months – with 68 or less not out of the question longer term. “The things driving the loonie have been resource extraction, housing and population growth and Canada isn’t doing very well on any of those fronts right now,” he said. Button added that the Bank of Canada is going to have to start cutting rates far more aggressively than the market is currently expecting. Couple that with a U.S. Federal Reserve that will be able to go a little more slowly and stop sooner, that’s a recipe for a weak dollar. “There’s not exactly a rosy scenario coming out of this no matter which way it shakes out,” Button said. Jayati Bharadwaj, a senior FX strategist with TD Securities, told BNN Bloomberg’s The Close yesterday that with inflation on target, the loonie is likely to get weaker from here as rate cuts come. “The Bank of Canada… can take off the gas pedal and ease which is very different from where other central banks are,” she said. “And markets seem to be finally pricing in the premium of a Trump presidency which leads to a stronger U.S. dollar across the board.”
New high for Nasdaq: The tech heavy Nasdaq closed at an all-time high of 18,712.75 yesterday and is poised to make even more gains today after earnings from Google owner Alphabet came in better than expected after the bell. Revenue rose by 15 per cent to more than US$88 billion, and a big factor was a surge in advertising dollars, buoyed by spending on the U.S. presidential election and the Paris Olympics. Google is the appetizer for a seven-course meal of Big Tech earnings to come in the next few days, and if that strength continues across the rest of the Magnificent 7, there’s every reason to expect the Nasdaq has more gains to come.
BYD tops Tesla: Fort the first time, a company that isn’t Tesla holds the EV sales crown, as Chinese manufacturer BYD posted results on Tuesday that showed its revenues outpaced that of the U.S. giant. Revenue soared by 24 per cent to just over US$28 billion. That’s less than analysts were expecting but more than Tesla’s $25.2 billion in the same period. BYD sold an unprecedented 1.12 million electric and plug-in hybrid vehicles last quarter. That’s more than twice what Tesla shipped. Most of BYD’s sales growth is coming from the Chinese domestic market, which is good news for the company considering jurisdictions like the EU, U.S. and Canada are all slapping prohibitive tariffs on Chinese-made vehicles.
U.S. GDP cools: The U.S. economy grew at a 2.8 per cent annual pace from July to September, weaker than forecasts and a slowdown from the three per cent pace clocked the previous quarter. On the upside, consumer spending picked up, accelerating to a 3.7 per cent annual pace the previous quarter.
Eli Lilly shares under pressure: Shares in drug company Eli Lilly are off by more than eight per cent premarket after the company said sales of its weight loss products Mounjaro and Zepbound are not selling as well as forecast. The shares have gained more than 50 per cent to join the trillion-dollar club this year on fever for all things weight loss related, so it didn’t take much for investors to start thinking the hype train is perhaps derailing.