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Loonie soars as Canada shows strength; US gains amid caution on China

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Loonie soars as Canada shows strength

Economists predicted the Canadian dollar will reach parity with the U.S. dollar by summer as expectations of higher interest rates, rising commodity prices, and strong investor demand keep driving the currency upwards. The loonie closed at 97.63 cents U.S. on Thursday, gaining 3.5 cents in the last two weeks. Overheating fears are growing in China as inflation hit a 16-month high and industrial output and investment growth beat forecasts. China’s central bank is expected to raise interest rates or resume gradual appreciation of the yuan in the near future.

The U.S. ran up its largest monthly deficit ever in February as the shortfall widened 14% to US$221-billion, pushing the year-to-date deficit to a record $651.60-billion, up 10% from last year. Mexican telecom tycoon Carlos Slim Helu is the world’s richest man, according to Forbes’ list of the world’s billionaires, edging out Bill Gates, who held the spot for 14 out of the past 15 years. The number of millionaires in the U.S. jumped 16% last year to 7.8 million after dipping sharply during 2008.

Markets

U.S. gains amid caution on China

U.S. banks rallied, sending the S&P 500 Index to its highest level since October 2008. In Canada, the TSX showed little change, as traders were cautious amid worries that China may begin tightening to slow down economic growth. OPEC projected higher global oil demand in 2010. British oil giant BP sealed a US$7-billion deal with Devon Energy to buy exploration rights off the shores of Brazil as well as oil assets in the Gulf of Mexico and Caspian Sea. The firms also agreed to an oil sands joint venture in Canada.  Tropicana will reduce the size of its juice containers and raise prices after a winter freeze devastated Florida’s citrus crops.

General Motors is on track to repay US$8-billion in government loans before June, earlier than promised. BMW reported profits were down 36% in 2009, as sales fell 10%. On Tuesday, the Conference Board of Canada predicted the air transportation sector will turn around a $200-million loss in 2009 and post profits of $197-million in 2010. However, the next day, Transat reported a much weaker-than-expected first-quarter result and issued a gloomy outlook for 2010. Cisco announced a new router system with three times the speed and enough bandwidth to stream every movie ever made in just four minutes.

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