Briefing highlights
- Canadian dollar at 75 cents
- Markets at a glance
- Manufacturing sales slump
- From today’s Globe and Mail
Canadian dollar slips
The Canadian dollar slipped to 75 US cents today, driven down by generally downbeat economic sentiment.
But there’s another issue out there.
Société Générale believes the mounting tensions between Canada and China are helping to push the loonie lower.
“We are seeing a situation today where the global risk sentiment is a little bit downbeat,” said foreign exchange strategist Alvin Tan.
But on top of that is the continuing fight that began with the arrest in Vancouver of Huawei Technologies chief financial officer Meng Wanzhou, who was detained at the request of the U.S., which wants her extradited on allegations related to violations of sanctions against Iran.
No charges have been proven in court.
As Lawrence Martin, Robert Fife and Steven Chase report, the U.S. has told Ottawa it will press ahead with a formal bid for Ms. Meng’s extradition. And again today, Chinese authorities demanded she be released.
China has also detained, and is still holding, two Canadians it accuses of threatening its national security.
This affects the currency because markets could speculate China could take further action against Canada, Mr. Tan said.
Which is interesting because U.S.-China relations are at the heart of the matter.
But Beijing is desperate for a trade deal with Washington amid tit-for-tat tariffs, and “it’s unlikely that they want to rock the boat,” Mr. Tan said.
Elsa Lignos, Royal Bank of Canada’s global head of foreign exchange strategy in London, said, however, that the loonie doesn’t appear to be “wildly out of whack” with where it should be today.
Indeed, the Huawei issue has a bigger impact when it raises questions about relations between the U.S. and China, which affects all asset classes, she said.
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Markets at a glance
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Manufacturing sales slump
Canada’s manufacturers suffered a sales drop of 1.4 per cent in November, marking the second monthly tumble in a row.
When you strip out price impacts, shipments dropped 0.9 per cent in volume terms.
Led by weaker petroleum and coal products, sales fell in 13 of 21 industries measured, accounting for about 45 per cent of the sector’s total, Statistics Canada said today.