The speech given yesterday by Carolyn Wilkins, the Bank of Canada's Senior Deputy Governor, in no way reassured markets with respect to the Canadian economy. In addition to specifying that the economy has room to grow, Ms. Wilkins also stated that current low crude oil prices represent a risk to the country's financial stability. Schulumberger, Halliburton (NYSE:HAL) has also announced layoffs to its workforce, eliminating close to 5,000 positions. These decisions are another sign that major oil and gas companies are postponing or cancelling exploration and expansion projects.
According to Ms. Wilkins, the Bank of Canada has the tools required to help the country's economy get through this rough patch. This speech was entirely consistent with market expectations for another key rate cut. Consequently, the loonie could remain weak in the short term.
Lastly, attention will now turn to Europe, specifically on the crucial meeting of European finance ministers that gets underway today. Have a great day!
Julien Duquette
- Range of the day: 1.2600 - 1.2730