Loonie, stock indices show some strength

That’s not good news for our neighbors to the north (or the USA companies that make money exporting to them), but Doyle has been right before, according to the CBC: He nailed a prediction he made last February that the Canadian dollar would fall below 70 cents US within a year.

On the commodity markets, the February gold contract was up $6.50 at US$1,091.79 an ounce and the crude contract was up 38 cents at US$30.80 per barrel.

Patrick Leblond, an expert in finance at the University of Ottawa, said market traders are more concerned with the fundamental challenges facing the loonie than its decline below an arbitrary price point.

Canada is a major oil producing country and oil prices have plummeted.

The highest the loonie has ever been was in November 2007 when it reached 110.3 cents U.S. The Bank of Canada closed at 69.997 U.S.at noon on Tuesday.

“The U.S. dollar becomes a refuge, and that’s what we’ve seen in the last few days”, he said.

Jan 13 Canada’s main stock index rose on Wednesday, led by consumer discretionary stocks, although earlier gains were pared as crude oil prices fluctuated.

When the loonie is low compared to the U.S. dollar, Canadian exporters can more easily find new business.

Morneau is in the second day of a six-day tour across Canada to consult with stakeholders from various industries before finalizing the newly elected government’s first budget.

The low loonie, which makes exports cheaper, has not resuscitated the manufacturing sector the way some predicted, partly because of the extent of its decimation during the recession.

The currency has been sinking for some time as a result of lower oil prices, among other factors. It lowered rates again in July to the current 0.5 per cent.