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19 hours ago
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Posthaste: Why the Canadian dollar is going up when the economy is going down
A funny thing has been happening to the Canadian dollar lately. Despite evidence that the economy is weakening, the currency has been going up, not down, rising 3 per cent against the U.S. dollar since President Donald Trump's Liberation Day. That's not usually how it works, but some strategists think this is more than just a temporary overshoot. Desjardins Group expects the divergence will continue to widen in coming months, with the loonie rising to 74 cents U.S. by the end of this year and to almost 77 cents U.S. by the end of the next. It was trading up at 73.08 this morning. The forecast is based on the U.S. dollar losing strength rather than the Canadian dollar gaining it, said Mirza Shaheryar Baig, a foreign exchange strategist with Desjardins. The loonie's performance against other major currencies has not been stellar. 'Net-net, a strong loonie is the result of a shift in global capital flows leading to a broadly weaker U.S. dollar,' he said. Since Liberation Day the U.S. dollar has become positively correlated with stocks. 'In other words, it has lost its safe haven appeal. This matters because many Canadian institutional investors who did not hedge the currency risk on their U.S. investments are now being forced to raise their hedge ratios,' said Shaheryar Baig. The outlook for the U.S. economy is also weakening. Coming out of the pandemic, it grew faster than other economies, but that has changed. Expectations for U.S. growth have dropped and are now in line with other advanced economies, he said. The Organisation for Economic Co-operation and Development warned last week that Trump's tariff war will sap global growth in 2025 and it gave the United States the biggest downgrade among G7 nations. The OECD sees its growth slowing sharply from 2.8 per cent in 2024 to 1.6 per cent this year, and 1.5 per cent next. Trump's tactics to raise the income share of American workers is also unnerving investors, said Shaheryar Baig. Telling Walmart Inc. 'to eat the tariffs' and threatening Apple Inc. with duties on products made out of the country does not help boost the profits investors are looking for. 'To many investors, American capitalism now resembles Chinese 'common prosperity,'' he said. Desjardins admits its forecast has risks. America dodged a widely expected recession in 2023 and its economy could surprise again. Carry trade in the U.S. dollar, which has the highest deposit yields in the G7, could also revive, he said. The downside of a strong Canadian dollar against the greenback is that it makes exports more expensive, a drag on Canada's already fragile economy. Desjardins believes this will force the Bank of Canada to cut its interest rate another 75 basis points to 2 per cent this year. to get Posthaste delivered straight to your manufacturing sector has been slammed by tariffs, but now new data shows that services, which makes up a much bigger share of the economy, are suffering too. S&P Global's Services PMI for May shows this sector is not only in contraction, but is also the weakest of all 14 countries covered, said National Bank of Canada economists. Earlier last week S&P Global's manufacturing PMI put Canada as the lowest among 30 countries. 'That's dead last in manufacturing and dead last in services, leaving Canada as clear outlier in this sample of key peers,' said National. Prime Minister Mark Carney will be in Toronto today to make an announcement related to 'defence and security priorities.' Today's Data: United States wholesale trade What is the bond market and why is everybody so worried about it? The robots are coming! 10 predictions on what AI means for your mortgage and home Canada's unemployment rate hits 7%, highest since 2016 outside the pandemic The bond market has been making headlines lately as Donald Trump's 'big beautiful' bill raises concern about the state of America's finances. But just what is the bond market, how does it work and why is it such a problem when investors get jittery about it? The Financial Post explains. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ These three provinces are most at risk as cracks appear in Canada's economy Homeowners up for renewal are in for a wake-up call Sign in to access your portfolio
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20 hours ago
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Posthaste: Why the Canadian dollar is going up when the economy is going down
A funny thing has been happening to the Canadian dollar lately. Despite evidence that the economy is weakening, the currency has been going up, not down, rising 3 per cent against the U.S. dollar since President Donald Trump's Liberation Day. That's not usually how it works, but some strategists think this is more than just a temporary overshoot. Desjardins Group expects the divergence will continue to widen in coming months, with the loonie rising to 74 cents U.S. by the end of this year and to almost 77 cents U.S. by the end of the next. It was trading up at 73.08 this morning. The forecast is based on the U.S. dollar losing strength rather than the Canadian dollar gaining it, said Mirza Shaheryar Baig, a foreign exchange strategist with Desjardins. The loonie's performance against other major currencies has not been stellar. 'Net-net, a strong loonie is the result of a shift in global capital flows leading to a broadly weaker U.S. dollar,' he said. Since Liberation Day the U.S. dollar has become positively correlated with stocks. 'In other words, it has lost its safe haven appeal. This matters because many Canadian institutional investors who did not hedge the currency risk on their U.S. investments are now being forced to raise their hedge ratios,' said Shaheryar Baig. The outlook for the U.S. economy is also weakening. Coming out of the pandemic, it grew faster than other economies, but that has changed. Expectations for U.S. growth have dropped and are now in line with other advanced economies, he said. The Organisation for Economic Co-operation and Development warned last week that Trump's tariff war will sap global growth in 2025 and it gave the United States the biggest downgrade among G7 nations. The OECD sees its growth slowing sharply from 2.8 per cent in 2024 to 1.6 per cent this year, and 1.5 per cent next. Trump's tactics to raise the income share of American workers is also unnerving investors, said Shaheryar Baig. Telling Walmart Inc. 'to eat the tariffs' and threatening Apple Inc. with duties on products made out of the country does not help boost the profits investors are looking for. 'To many investors, American capitalism now resembles Chinese 'common prosperity,'' he said. Desjardins admits its forecast has risks. America dodged a widely expected recession in 2023 and its economy could surprise again. Carry trade in the U.S. dollar, which has the highest deposit yields in the G7, could also revive, he said. The downside of a strong Canadian dollar against the greenback is that it makes exports more expensive, a drag on Canada's already fragile economy. Desjardins believes this will force the Bank of Canada to cut its interest rate another 75 basis points to 2 per cent this year. to get Posthaste delivered straight to your manufacturing sector has been slammed by tariffs, but now new data shows that services, which makes up a much bigger share of the economy, are suffering too. S&P Global's Services PMI for May shows this sector is not only in contraction, but is also the weakest of all 14 countries covered, said National Bank of Canada economists. Earlier last week S&P Global's manufacturing PMI put Canada as the lowest among 30 countries. 'That's dead last in manufacturing and dead last in services, leaving Canada as clear outlier in this sample of key peers,' said National. Prime Minister Mark Carney will be in Toronto today to make an announcement related to 'defence and security priorities.' Today's Data: United States wholesale trade What is the bond market and why is everybody so worried about it? The robots are coming! 10 predictions on what AI means for your mortgage and home Canada's unemployment rate hits 7%, highest since 2016 outside the pandemic The bond market has been making headlines lately as Donald Trump's 'big beautiful' bill raises concern about the state of America's finances. But just what is the bond market, how does it work and why is it such a problem when investors get jittery about it? The Financial Post explains. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ These three provinces are most at risk as cracks appear in Canada's economy Homeowners up for renewal are in for a wake-up call Sign in to access your portfolio
Yahoo
a day ago
- Business
- Yahoo
Posthaste: Why the Canadian dollar is going up when the economy is going down
A funny thing has been happening to the Canadian dollar lately. Despite evidence that the economy is weakening, the currency has been going up, not down, rising 3 per cent against the U.S. dollar since President Donald Trump's Liberation Day. That's not usually how it works, but some strategists think this is more than just a temporary overshoot. Desjardins Group expects the divergence will continue to widen in coming months, with the loonie rising to 74 cents U.S. by the end of this year and to almost 77 cents U.S. by the end of the next. It was trading up at 73.08 this morning. The forecast is based on the U.S. dollar losing strength rather than the Canadian dollar gaining it, said Mirza Shaheryar Baig, a foreign exchange strategist with Desjardins. The loonie's performance against other major currencies has not been stellar. 'Net-net, a strong loonie is the result of a shift in global capital flows leading to a broadly weaker U.S. dollar,' he said. Since Liberation Day the U.S. dollar has become positively correlated with stocks. 'In other words, it has lost its safe haven appeal. This matters because many Canadian institutional investors who did not hedge the currency risk on their U.S. investments are now being forced to raise their hedge ratios,' said Shaheryar Baig. The outlook for the U.S. economy is also weakening. Coming out of the pandemic, it grew faster than other economies, but that has changed. Expectations for U.S. growth have dropped and are now in line with other advanced economies, he said. The Organisation for Economic Co-operation and Development warned last week that Trump's tariff war will sap global growth in 2025 and it gave the United States the biggest downgrade among G7 nations. The OECD sees its growth slowing sharply from 2.8 per cent in 2024 to 1.6 per cent this year, and 1.5 per cent next. Trump's tactics to raise the income share of American workers is also unnerving investors, said Shaheryar Baig. Telling Walmart Inc. 'to eat the tariffs' and threatening Apple Inc. with duties on products made out of the country does not help boost the profits investors are looking for. 'To many investors, American capitalism now resembles Chinese 'common prosperity,'' he said. Desjardins admits its forecast has risks. America dodged a widely expected recession in 2023 and its economy could surprise again. Carry trade in the U.S. dollar, which has the highest deposit yields in the G7, could also revive, he said. The downside of a strong Canadian dollar against the greenback is that it makes exports more expensive, a drag on Canada's already fragile economy. Desjardins believes this will force the Bank of Canada to cut its interest rate another 75 basis points to 2 per cent this year. to get Posthaste delivered straight to your manufacturing sector has been slammed by tariffs, but now new data shows that services, which makes up a much bigger share of the economy, are suffering too. S&P Global's Services PMI for May shows this sector is not only in contraction, but is also the weakest of all 14 countries covered, said National Bank of Canada economists. Earlier last week S&P Global's manufacturing PMI put Canada as the lowest among 30 countries. 'That's dead last in manufacturing and dead last in services, leaving Canada as clear outlier in this sample of key peers,' said National. Prime Minister Mark Carney will be in Toronto today to make an announcement related to 'defence and security priorities.' Today's Data: United States wholesale trade What is the bond market and why is everybody so worried about it? The robots are coming! 10 predictions on what AI means for your mortgage and home Canada's unemployment rate hits 7%, highest since 2016 outside the pandemic The bond market has been making headlines lately as Donald Trump's 'big beautiful' bill raises concern about the state of America's finances. But just what is the bond market, how does it work and why is it such a problem when investors get jittery about it? The Financial Post explains. Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ These three provinces are most at risk as cracks appear in Canada's economy Homeowners up for renewal are in for a wake-up call
Yahoo
4 days ago
- Business
- Yahoo
Presale buyers left in limbo after Burnaby development goes bust
Had things gone according to plan, Joe Racanelli and his wife would have long been settled in their new fifth floor condo in Burnaby and enjoying beautiful views of the North Shore mountains, in a building called Siena at the Heights. Instead, the retired couple and former painting business owners can only look at the big hole in the ground on Hastings Street that's now up for sale and wonder when they'll get their presale deposit of $170,000 back, after the Siena at the Heights failed to get off the ground. "It was a great location for us. We like that area," said Racanelli. "The only problem is we've waited for four years and we've been promised every year that things were very close to being taken care of." The Racanelli's downpayment was for a two bedroom, two bathroom top floor unit in November of 2021, and it was equal to 15 per cent of the purchase price. According to their agreement with the developer, the completion date would be sometime between April 1 to July 1 of 2024, with an absolute latest completion date — or "outside date" — of Dec. 31, 2024. Marketed as "classic in character, uncompromising in design," the Siena was supposed to be a five-storey mixed-use development with 38 condos above street level strata retail. But things started going sideways almost as soon as construction began, and the project stopped completely after only a portion of the underground parking had been built. 'Dead in the water' "[The developer] said there were labour disputes with the original contractor," Racanelli said. "They extended the outside date to September 16, 2026. We kept waiting on that because we really wanted it to succeed. But now it's dead in the water." In November of last year, lender Desjardins Group filed to put Siena at the Heights into receivership, claiming the developers had defaulted on payments and conditions attached to almost $30 million in loans. The response filed by I4 Property Group Inc., its president Myron Calof, I4PG Hastings Street Inc. and Hastings Street Limited Partnership claims that another company, Kerkhoff Construction (2022) Ltd., was the problem. Kerkhoff had been hired as general contractor for the project. "As events transpired, the fact that [Kerkhoff] was as [a] single purpose corporation incorporated for purposes of this project cause the project considerable difficulties," it reads. The response goes on to say that Kerkhoff "had difficulty with the excavation, and by June 2023 the project was in financial difficulties." It says Kerkhoff could not provide "required statutory declaration that its sub-trades had been paid." Kerkhoff was fired in Sept. 2023. In an attempt to stave off receivership, the response also laid out a plan to reorganize the project's financing and debts, stating the building could be easily restarted, as "... it is not suffering any damage or waste ... while construction has been halted." However on Valentine's Day of this year, Deloitte Restructuring Inc. was appointed receiver and the Siena lands at 4437 Hastings Street were ordered sold. CBC reached out to Calof for comment. In a text he wrote: "The matter is before the courts and I do not feel I am at liberty to say anything." The Siena property is now on the market for $16 million in the court ordered sale. The assessed value of the .16 hectare site was $12.269 million as of July 1, 2024. According to documents posted by Deloitte, Dejardins Group is owed $14,546,000 on a first-ranking mortgage, Travelers Insurance Company of Canada owed an "unknown amount" on a second-ranking mortgage, while Longthorn Holdings Ltd. holds a third-ranking mortgage of $700,000. In addition there are nine builders' liens against the property amounting to $2.48 million. Fifty-nine "other creditors" are owed a cumulative $1.64 million from the failed project. Smoke Signals Flagging of Chilliwack, B.C., is one of those creditors, out $31,507 after being hired by Kerkhoff and spending months at the site. One-woman protest "I had a truck and two people on the job. What [Kerkhoff] owed me was piling up and piling up. And then they told me they went bankrupt," said company owner Danita Leon. Leon even went so far as to stage a one-woman sit-in at Kerkhoff's office in Chilliwack, demanding what she was owed. "I was so mad. I marched in there and told them 'I'm just a small little Native company. I pay my bills and you should too.'" Kerkhoff coughed up a bit of money, according to Leon. As for the remaining $31,507, she's come to terms with having to eat the loss and doubts she'll ever see a penny from the receiver. "I cried about it but now my tears have now dried up," she said. The 31 parties who put down presale deposits amounting to over $5.336 million should fare better. That's because the Real Estate Development Marketing Act compels developers to hold presale funds in trust. Racanelli said he's been assured by the receiver that his deposit money is secure, but is still awaiting confirmation on the conditions of a refund. Making matters worse is the math. Racanelli calculates had his $170,000 sat in a bank account rather than being tied up in the dead asset of the Siena for almost four years, he could have earned upwards of $30,000 in interest. "It's been frustrating and worrying," he said. "What if it takes another two or three years for this to be sold? I mean, the property is definitely not going ahead. We should get our money back." Contamination claim Separate court documents shine a light into a contamination issue at the site, which the developer raised a few years prior to construction. In a 2019 notice of civil claim, I4PG Hastings alleged a number of dry cleaning businesses — some going back decades — that had operated in the same block as the Siena project, leaked chemicals that contaminated the site and caused "contaminated vapour plumes." The claim was seeking compensation for site remediation, removal of contaminated soil and groundwater and "construction of an impermeable barrier to prevent ongoing contamination," however the action was abandoned in January of last year. CBC News asked Calof if the site contamination was related to the demise of the Siena development, but he did not answer the question in his reply, nor was site contamination mentioned in the developer's response to the receivership filing.
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5 days ago
- Business
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Posthaste: These three provinces are most at risk as cracks appear in Canada's economy
All of Canada is expected to struggle this year amid the uncertainty of the tariff war, but for some provinces that struggle will be worse than for others. Recent studies by economists identify a growing regional disparity in the country, where the west and east stride above the national average and the centre stumbles. 'The coming quarters will likely reveal more pronounced regional disparities, with central provinces facing steeper headwinds compared to their western and Atlantic counterparts and potentially dipping into recessions,' said Laura Gu, senior economist for Desjardins Group. Alberta and Saskatchewan are expected to lead growth this year as lower tariffs on energy products prove manageable and the Trans Mountain pipeline expansion opens new markets. The economies of British Columbia on one side of the country and the eastern provinces on the other are relatively insulated from Donald Trump's tariffs. It is the centre of Canada — Ontario, Quebec and Manitoba — that will bear the brunt of the trade war, said the economists. The outlook for Ontario, with its heavy manufacturing base, has deteriorated sharply said Gu, hit by both its exposure to U.S. trade and the housing market downturn. The auto sector that employs more than 135,000 people is struggling to cope with the 'double whammy' of U.S. tariffs and a stalling transition to electric vehicles. Already there has been plant shutdowns, shift reductions and delays in EV investments. 'With exports set to decline, consumption weakening and business investment under pressure, Ontario is likely to enter a technical recession as early as Q2 2025,' said Gu. Desjardins also expects Quebec to slip into a technical recession — two consecutive quarters of negative growth — soon as exports fall and uncertainty weighs on business investment. The province's large manufacturing sector, especially in aluminum which now faces a 50 per cent tariff from the United States, makes it among the most exposed to the trade war. Manitoba too is expected to underperform the national average as Desjardins estimates that it faces the third highest effective tariff rate behind Ontario and Quebec. The province's agricultural sector is also under pressure from stiff duties on its key exports, canola, pork and peas. Seventy per cent of Manitoba's agricultural exports go to either the U.S. or China. Desjardins forecasts that Ontario and Quebec's real gross domestic product will advance just 0.9 per cent this year, and Manitoba's 1 per cent, all lagging country-wide growth of 1.1 per cent. A recent forecast by BMO Capital Markets pegs growth even lower at 0.4 per cent for Quebec and 0.6 per cent for Ontario and Manitoba, compared with a growth rate of 1 per cent for Canada. to get Posthaste delivered straight to your inbox.U.S. President Donald Trump's 'big beautiful bill' has thrown public debt into the spotlight and not in a good way. An analysis by the Congressional Budget Office out yesterday said the bill will add US$2.4 trillion to America's debt by 2034, driving up budget deficits over the coming decade, despite White House's insistence that it would slash them. U.S. debt is perhaps the most high profile, but it is not alone in its rapid expansion. As today's chart from the International Monetary Fund shows, public debt is higher than before the pandemic and rising at a faster pace in a third of the world's countries that account for 80 per cent of global output, said the International Monetary Fund. More than two-thirds of the 175 economies in the IMF study now have heavier public debt burdens than before the COVID pandemic in 2020. If this trend continues that debt could rise to 100 per cent of the global gross domestic product by the end of the decade, said the IMF. Today's Data: Canada International Merchandise Trade, United States trade balance, nonfarm productivity, Earnings: Lululemon Athletica Ltd., Saputo Inc., Broadcom Inc. Bank of Canada holds interest rate at 2.75% again as 'uncertainty remains high' 'There's no barriers for mother nature': Wildfires continue to burn out of control near oilsands plants Canadian AI start-up Cohere seeks US$500 million in effort to catch up to OpenAI and Anthropic Bianca is 65, enjoys her job and knows her employer would love her to stay as long as possible. However, she turns 66 at the end of this year and thinks this might be the right time to retire – if her investment portfolio can generate $6,000 a year in after-tax dollars. Is this a pipe dream? Would she be better off working an additional year or two, especially given the high cost of living and the fact she has a mortgage? Family Finance crunches the numbers. Find out more Are you worried about having enough for retirement? Do you need to adjust your portfolio? Are you starting out or making a change and wondering how to build wealth? Are you trying to make ends meet? Drop us a line at wealth@ with your contact info and the gist of your problem and we'll find some experts to help you out while writing a Family Finance story about it (we'll keep your name out of it, of course). Want to learn more about mortgages? Mortgage strategist Robert McLister's Financial Post column can help navigate the complex sector, from the latest trends to financing opportunities you won't want to miss. Plus check his mortgage rate page for Canada's lowest national mortgage rates, updated daily. Visit the Financial Post's YouTube channel for interviews with Canada's leading experts in business, economics, housing, the energy sector and more. Today's Posthaste was written by Pamela Heaven with additional reporting from Financial Post staff, The Canadian Press and Bloomberg. Have a story idea, pitch, embargoed report, or a suggestion for this newsletter? Email us at posthaste@ Homeowners up for renewal are in for a wake-up call Canadians are missing credit payments at rates not seen since the financial crisis Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
