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

Letter Budget 2018 fails to address fundamental issues of wealth generation

Dear Editor,Budget 2018, like other budgets presented by the APNU/AFC Government, lacks economic perspicacity and wit. The main findings are:* Low economic growth: Had our key sectors performed similar to 2014, the economy would have grown by 6.1%, rather than a mere 2.8%.* Erroneous forecast: a year ago, the Hon. Minister stated that a balance of payment surplus of US$20 million would be materialized by the end of 2017. Now, in Budget Speech 2018, that figure has mutated into a US$53.1 million deficit.* Loss of revenues: Export has shrunk by more than US$76.6 million, or Gy$15.4 billion, since 2015. This loss gets even bigger at US$146 million, or Gy$30 billion, when compared to 2014. Even more worrisome, using the conservative estimates of the Hon. Minister for 2018, projected foreign exchange from the export of sugar and rice is expected to further decline by US$5.8 million and US$17.5 million respectively. Had the APNU/AFC not tried to reinvent the wheel, public servants could today have enjoyed a 173% increase in salary with the amount of lost revenue.* Nothing for rice farmers: Rice is expected to contract by some US$18 million, or Gy$3.7 billion in 2018. The question now is: should rice farmers expect less for a bag of paddy in 2018, or is it that the rice deal with Cuba is only for a selected few?* More tax in 2018: The newly proposed countrywide valuation exercise of properties will rake in billions. The last valuation was done some 20 years ago. Given the massive infrastructural development under the PPP, property value since then has skyrocketed.* Less money for the people: From 2014 to 2017, overall tax has increased by more than 5%. The increase has slashed private consumption from $522 billion in 2014 to $490 billion in 2017. What this tells us is that purchasing power of the people has plummeted by more than 6.1%, or $32 billion. Evidence of this can be seen in the reduction in import of vehicles by $1.5 billion when compared to 2016.* Wastage of taxpayers’ money: On average, it cost the PPP/C Government $1.3 million in recurrent expenditure to execute $1 million in capital projects. Now, in 2017, this Government is spending $3.3 million, or 66% more, to execute the same $1 million in capital projects.* More job loss: Investment in agriculture, mining and quarrying, and manufacturing have all plummeted by more than $4.4 billion. Overall, private investment fell from $185 billion in 2015 to $163 billion in 2017.* Less money for private investment: Starting from 2015, total budget deficit increased from $9.3 billion to $34.5 billion in 2017, and is expected to increase even further by another $8.7 billion to $43 billion in 2018. And in 2018, this figure is expected to increase to $34 billion. This means there is less money for private investment.* Higher exchange rates: In 2012, some 22% of domestic credit was used to finance investments in Guyana. Fast forward to 2017, under this new administration, that percentage skyrocketed to 78%. Clearly, FDI is in a tailspin. Shortage of foreign resource inflows will put downward pressure on our exchange rate.* High food prices: Prices for food, medical and personal cares, and education, recreation and cultural services will increase by 4.5%, 3.4% and 3.6% respectively by end 2017.When assessed, Budget 2018 is nothing but a chimera that fails to address fundamental issues of wealth generation and expansion. This budget is again out of touch with reality, and certainly will continue to weaken the macroeconomic foundation, and undermine all social gains that the PPP/C Government took 23 years to build and amass.Sincerely,Cecil Williams Share this:Click to share on Twitter (Opens in new window)Click to share on Facebook (Opens in new window)RelatedAFC reports mismanagement in Guyana’s economy; questions decline in ReservesJanuary 29, 2015In “Politics”Guyana’s economy eroding at alarmingly fast rateAugust 13, 2017In “Local News”2018 Budget should focus on growth, development & welfare of the people- OppositionNovember 22, 2017In “latest news” read more