Loonie down half a cent after Poloz comments, mining stocks help boost TSX - InfoNews

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Loonie down half a cent after Poloz comments, mining stocks help boost TSX

The Canadian dollar was trading at 77.44 cents US, down from Monday's average price of 77.94 cents US. A Canadian dollar coin, or loonie, and an American dollar are balanced on a scale in Quebec City on April 7, 2010. THE CANADIAN PRESS/Jacques Boissinot
March 13, 2018 - 1:58 PM

TORONTO - A broad-based rally gave the Toronto stock index a boost Tuesday as the loonie fell nearly half a cent after the head of the Bank of Canada signalled a gradual pace of rate hikes going forward.

The Canadian dollar closed at an average trading value of 77.45 cents US, down 0.49 of a U.S. cent.

During a speech in Kingston, Ont., on Tuesday, Bank of Canada governor Stephen Poloz said he was focused on the untapped potential in labour markets and their importance to overall economic growth, where he made it clear accommodative monetary policy is not going away any time soon.

"With the emphasis on ongoing investment and the impacts of broader labour market participation, it seems Poloz may be previewing a change of view on Canada's long-run potential in April's Monetary Policy Report," said Brian DePratto, senior economist at TD Economics.

"Such a change would imply less inflationary pressures than would otherwise be the case, and thus less impetus to tighten monetary policy. We remain of the view that in contrast to the relatively rapid-fire pace of tightening between July of last year and this January, a gradual pace of hikes is likely going forward."

The loonie soared last year after the central bank surprised the markets and raised interest rates twice in the third quarter. However, policy-makers subsequently tempered their hawkish tone, emphasizing that the bank will proceed cautiously in order to gauge the impact of higher borrowing costs and a stronger loonie on the economy.

In stock markets, the S&P/TSX composite index was up 42.35 points to 15,647.14, with strong gains coming from the materials, gold and base metals sectors.

The April bullion contract was up US$6.30 to US$1,327.10 an ounce and the May copper contract was up one cent to US$3.14 a pound.

South of the border, a pullback in technology stocks knocked out an early rally on Wall Street.

Chipmakers were in focus Tuesday after the White House blocked a hostile takeover of Qualcomm by rival Broadcom, citing national security concerns. Qualcomm slumped five per cent in heavy trading.

Stocks had started the day higher, and bond yields fell, after the U.S. government reported that inflation in consumer prices remained muted last month.

In New York, the Dow Jones industrial average was down 171.58 points to 25,007.03. The S&P 500 index was down 17.71 points to 2,765.31 and the Nasdaq composite index was down 77.31 points to 7,511.01.

Elsewhere in commodities, the April crude contract was down 65 cents to US$60.71 per barrel and the April natural gas contract was up one cent at US$2.79 per mmBTU.

- With files from The Associated Press

News from © The Canadian Press, 2018
The Canadian Press

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