By Commodity News Service Canada
Sept. 6 (CNS Canada) – The Bank of Canada has hiked by one-quarter of a per cent its key overnight lending rate to one per cent this morning. The bank cited stronger than expected economic data that shows Canadian economic growth is “broad-based and self-sustaining.” It is the central bank’s second interest rate increase this year.
The Canadian dollar was trading slightly down this morning at US$0.8063 (C$1.2402), just after the Bank of Canada announcement that it would increase its benchmark lending rate to one per cent. The Canadian dollar closed Tuesday US$0.8084, or C$1.2371.
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The S&P/TSX was down 28.55 points, or 0.19%, immediately after the Bank of Canada interest rate increase, sitting at 15,4061.60 at 9:15 a.m. CDT. The index had gained about 60 points early in the morning just prior to the announcement.
Investors are likely to remain cautious today after major stock markets across Canada and the United States tumbled yesterday on the uncertainty over the tensions surrounding North Korea’s nuclear weapons program. With growing political issues in Washington including the investigation into possible Russian meddling in the U.S. election heating up, tax reform, and Hurricane Irma headed toward Florida, many analysts do not expect a quick return of investor confidence.
Canada’s trade deficit fell in July thanks partly to a stronger loonie, which reduced the value of imports, a Statistics Canada report said. Lower prices for imports also contributed. The effects of a stronger Canadian dollar on exports offset some of the deficit gains by reducing the value of Canadian exports. Most top exporters price goods in U.S. dollars so their exchange difference decreases as the Canadian dollar rises. The deficit fell to C$3.04 billion in July from C$3.76 billion in June
Oil prices climbed today as refineries along the Texas coast started to reopen following Hurricane Harvey. Traders remain wary of Hurricane Irma, however, which is currently expected to hit Florida on Saturday. WTI crude was up 45 cents U.S. early today to US$49.11.
