Canadian dollar climbs modestly as mining stocks weigh on Toronto stock index

by David Hodges, The Canadian Press Posted Jul 13, 2017 9:37 am MDT Last Updated Jul 13, 2017 at 3:20 pm MDT AddThis Sharing ButtonsShare to TwitterTwitterShare to FacebookFacebookShare to RedditRedditShare to 電子郵件Email TORONTO – Toronto’s main stock index was relatively flat Thursday as the Canadian dollar climbed modestly following sharp currency market movements the day before.The loonie was trading at an average price of 78.47 cents US, up 0.31 of a U.S. cent, after it soared nearly a full cent Wednesday in the wake of the Bank of Canada’s decision to raise its key interest rate for the first time in nearly seven years.That movement came as the S&P/TSX composite index slipped 8.99 points to 15,135.00, with mining stocks leading decliners.“The big story today is that currency markets have taken a pause after the big rally we saw with the loonie yesterday,” said Todd Mattina, chief economist and strategist at Mackenzie Investments.“They’re taking a breather and I think they’re also digesting the bank’s outlook.”Although the markets had been anticipating a rate increase from the central bank on Wednesday, it was not expecting Bank of Canada governor Stephen Poloz to express so much confidence about the move.“The bank’s optimistic growth forecast really fuelled some speculation that another rate hike was in the pipeline later this year,” said Mattina.“Markets are pricing in over a 70 per cent chance of a second rate hike by December.”South of the border, investors had their eye on Washington, where Federal Reserve chair Janet Yellen was testifying before Congress for the second day. On Wednesday, she raised the possibility that the Fed would consider slowing the pace of its interest rate increases if inflation remained persistently below its target level — remarks that set off a broad market rally the day before.But on Thursday, Yellen appeared to modify her comments, testifying that she saw the “risk on inflation as being two-sided,” stressing that price gains could both accelerate or slow down.“The interesting thing about Janet Yellen’s testimony is that she backtracked somewhat from the strong view that was in the Fed’s last policy statement — that underlying inflationary pressure was building,” said Mattina.“Now we’re seeing more uncertainty in Janet Yellen’s outlook.”In New York, the Dow Jones industrial average gained 20.95 points to 21,553.09, a record high. The S&P 500 index inched up 4.58 points to 2,447.83 and the Nasdaq composite index rose 13.27 points to 6,274.44.In commodities, the August crude contract was up 59 cents to US$46.08 per barrel and the August natural gas contract was down two cents at US$2.96 per mmBTU.The August gold contract fell US$1.80 to US$1,217.30 an ounce and the September copper contract declined two cents at US$2.66 a pound.– With files from The Associated PressFollow @DaveHTO on Twitter. Canadian dollar climbs modestly as mining stocks weigh on Toronto stock index read more