Canadian dollar hits a 5-week low as risk aversion climbs - Reuters News
Canadian dollar hits a 5-week low as risk aversion climbs - Reuters News
Canadian dollar weakens 0.4% against the greenback
Loonie touches its weakest since Aug. 14 at 1.3264
Canadian new house prices rise 2.1% year-over-year in August
Canadian bond yields ease across a flatter curve
TORONTO, Sept 21 (Reuters) - The Canadian dollar weakened to a five-week low against its U.S. counterpart on Monday as rising coronavirus infections weighed on investor sentiment, while domestic data showed new house prices increasing at the fastest annual rate in more than two years.
Global shares .WORLD fell as renewed lockdown measures in some countries due to the spread of the virus cast doubt over economic recovery. (Full Story)
Canada runs a current account deficit and is a major producer of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.
U.S. crude CLc1 prices were down 2.4% at $40.12 a barrel, pressured by the possible return of Libyan production and as rising COVID-19 cases stoked worries about global demand.
The Canadian dollar CAD= was trading 0.4% lower at 1.3254 to the greenback, or 75.45 U.S. cents. The currency touched its weakest intraday level since Aug. 14 at 1.3264.
Canada has also seen a rise in coronavirus infections. On Saturday, Ontario, the country's most-populous province, cracked down on private social gatherings. (Full Story)
Still, speculators have cut their bearish bets on the Canadian dollar for the fourth straight week, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of Sept. 15, net short positions had fallen to 16,943 contracts from 17,355 in the prior week.
Canadian new house prices rose 2.1% year-over-year in August, which was the largest increase since March 2018, Statistics Canada said.
Canadian government bond yields were lower across a flatter curve in sympathy with U.S. Treasuries on Monday. The 10-year CA10YT=RR fell 3.7 basis points to 0.544%.
Canadian Prime Minister Justin Trudeau is scheduled to unveil on Wednesday what he says is a bold far-reaching plan to help Canada recover from the coronavirus pandemic.
CANADA AUG NEW HOUSING PRICES +0.5 PCT VS +0.4 PCT IN JULY (FORECAST WAS +0.3 PCT); +2.1 PCT ON YEAR - Reuters News
Fed's Kaplan says low rates may be needed for 2-1/2 to 3 years - Reuters News
Sept 21 (Reuters) - Dallas Federal Reserve President Robert Kaplan on Monday said the economy will likely need near-zero interest rates for the next two and a half or three years, but the U.S. central bank shouldn't lock itself into low borrowing costs beyond then.
By 2023, he said, U.S. unemployment will likely have fallen to 4% or 3.5%, from its current 8.4%.
Once there, he said, "I probably think it's appropriate to remain accommodative, or maybe even highly accommodative," Kaplan said in an interview with Bloomberg Television. "I'm not sure it's appropriate to decide right now that at that point we should leave rates at zero; I would rather leave those judgments to future committees."
The comments were Kaplan's first public remarks since he cast a dissenting vote last week against the Fed's decision to promise low rates until inflation reaches and is on track to "moderately exceed" the central bank's 2% goal.
On Monday, Kaplan said he thought any benefits of the new promise were outweighed by the costs of fueling risk-taking in financial markets, and he appeared to welcome the drop in stock prices since the Fed's announcement.
The stock market's overall valuation of publicly traded U.S. companies has been high relative to the size of the U.S. economy, he said, and as long as credit spreads don't widen, a stock market correction can be healthy.
Still, he said, markets likely haven't fully digested the impact of the Fed's new low-rates promise.
The economy, Kaplan said, is likely growing this quarter at a 30% annual pace and will continue to grow strongly this year and next, assuming some further fiscal stimulus and progress with fighting the coronavirus pandemic, which threw the United States and the world into recession earlier this year.
