Canada Markets closed

Loonie could drop to nearly US$0.70 in near future: CIBC analysts

A Canadian dollar coin, is pictured in this photo illustration taken in Toronto January 23, 2015. (REUTERS/Mark Blinch/File Photo)

The Canadian dollar hovered around US$0.77 on Monday, continuing the steady trend downwards over the last six months.

According to CIBC economic analysts, it’s destined to head even lower.

The latest report out of CIBC Capital Markets suggests that we could see a loonie around US$0.71 in the 2020s.

“Perhaps we’re seeing the first signs of the loonie’s shift, if you look hard enough,” write CIBC economists Avery Shenfeld and Royce Mendes.

The report points to a weakening manufacturing industry and the lack of new industrial growth as part of the problem.

“What’s been lacking are ribbon-cutting ceremonies at the new facilities — factories, labs and office towers — needed to expand export capacity,” write Shenfeld and Mendes.

“When exports were in high gear in the late-1990s, they were accompanied by healthy gains in industrial capacity, growth that has gone missing since then, other than in energy production and a few isolated sectors. The question is, can Canada compete as a location for such facilities?”

The report goes on to highlight that other countries offer more cost-effective manufacturing wages for U.S. companies looking to have goods assembled out of country. Mexico, Taiwan and South Korea were all highlighted as alternatives that offer greater savings on wages.

Canada’s central bank is also less likely to be aggressive with rate hikes than the U.S., the report explains, as household debt in Canada remain elevated.

Altogether, it paints a pretty grim picture in the near future for the Canadian dollar, one that remains heavily dependent on the outcome of NAFTA talks, which continue to limp along.

“If we don’t make progress in tilting the playing field back to Canada, there is always the market’s invisible hand to do the work for us.”

Download the Yahoo Finance app, available for Apple and Android.

  • Asian shares struggle as European woes, Saudi concerns dim mood
    Finance
    Reuters

    Asian shares struggle as European woes, Saudi concerns dim mood

    Japan's Nikkei fell 1.25 percent. U.S. stock futures dropped 0.5 percent in early Asian trade. "In short, the world seems to be getting into a chaos," said Akira Takei, bond fund manager at Asset Management One.

  • Beijing Stems the Bleeding in the World's Wildest Equity Market
    Finance
    Bloomberg

    Beijing Stems the Bleeding in the World's Wildest Equity Market

    A measure of realized 10-day swings for the Shanghai Composite Index has jumped to about 45 percent, the highest of 47 benchmarks tracked by Bloomberg in emerging and developed markets. Futures on the FTSE China A50 Index fell 0.7 percent at 9:03 a.m. in Singapore.

  • Amazon.com, Qualcomm to put Alexa assistant in more headphones
    Finance
    Reuters

    Amazon.com, Qualcomm to put Alexa assistant in more headphones

    Under the deal, Qualcomm will release a set of chips that any maker of Bluetooth headphones can use to embed Alexa directly into the device. When the headphones are paired to a phone with the Alexa app on it, users will be able to talk to the voice assistant by tapping a button on the headphones. The

  • Bank of America Is Already Calling Time on China Stock Rally
    Finance
    Bloomberg

    Bank of America Is Already Calling Time on China Stock Rally

    The Shanghai Composite Index’s two-day gain is a sentiment-driven, short-term rebound that is unlikely to be sustained, said David Cui, BofAML’s head of China equity strategy who predicted China’s 2015 equities crash. Deep-pocketed state funds have been absent from the market, and their participation

  • Healthscope Gets A$4.1 Billion Bid From Group It Rejected in May
    Finance
    Bloomberg

    Healthscope Gets A$4.1 Billion Bid From Group It Rejected in May

    A bidding group led by buyout firm BGH Capital and pension fund AustralianSuper on Tuesday made a fresh A$4.1 billion ($2.9 billion) takeover approach for hospital operator Healthscope Ltd., five months after having a similar bid rejected as too low. Since then, Healthscope shares have plunged as much

  • Asian Stocks Resume Declines; Dollar Holds Gain: Markets Wrap
    Finance
    Bloomberg

    Asian Stocks Resume Declines; Dollar Holds Gain: Markets Wrap

    Stocks fell in Japan, Australia and South Korea. Futures in China and Hong Kong were lower, suggesting the biggest jump in more two years in the Chinese equities Monday may not extend. Earlier in the U.S., banks and energy stocks weighed on the S&P 500 Index though the FANG cohort lifted tech-heavy

  • Finance
    The Canadian Press

    Judge upholds Monsanto verdict, cuts award to $78 million

    A Northern California judge on Monday upheld a jury's verdict that found Monsanto's weed killer caused a groundskeeper's cancer, but she slashed the amount of money to be paid to the man from $289 million to $78 million. In denying Monsanto's request for a new trial, San Francisco Superior

  • UK's May pleads for support, says Brexit deal is almost done
    Finance
    The Canadian Press

    UK's May pleads for support, says Brexit deal is almost done

    British Prime Minister Theresa May sought to scotch a growing rebellion against her Brexit plans Monday, saying a divorce deal with the European Union is 95 per cent complete and urging fellow lawmakers to "hold our nerve" during the difficult last push in negotiations. May told the House

  • Finance
    Bloomberg

    Nidec, Schaeffler Vie for $1 Billion Asia Component Firm

    Nidec and Schaeffler are conducting due diligence as they weigh binding offers for the closely held company, the people said, asking not to be identified because the matter is private. A deal for PMI, whose components are used in semiconductor manufacturing, could be reached in the next few weeks, said

  • Finance
    The Canadian Press

    Trump administration unveils health options for small firms

    The Trump administration is rolling out new options for small employers to use tax-free accounts for providing health coverage to workers, officials said Monday. The idea is to expand so-called "health reimbursement arrangements" to allow employees to buy their own individual health insurance

  • Bayer Loses Bid to Wipe Out First Roundup Cancer Verdict
    Finance
    Bloomberg

    Bayer Loses Bid to Wipe Out First Roundup Cancer Verdict

    San Francisco Superior Court Judge Suzanne Ramos Bolanos rejected Bayer’s arguments that the jury didn’t have any basis to conclude that the herbicide caused an ex-school groundskeeper’s cancer. Jurors awarded $39 million to compensate plaintiff Dewayne Lee Johnson for his lost earnings and enjoyment

  • Private Equity Shifting Shale Strategy to Long Haul
    Finance
    Bloomberg

    Private Equity Shifting Shale Strategy to Long Haul

    With big, publicly traded drillers less eager to spend on acquisitions, private explorers that once counted on being gobbled up in three to five years are having to recalibrate, Howard Newman, chief executive officer at New York-based investment firm Pine Brook, said in an interview last week. With

  • Finance
    Bloomberg

    Arconic Is Weighing $11 Billion Offer From Apollo, Reuters Says

    Apollo’s offer values the U.S. company at between $23 and $24 a share, according to Reuters, which cited unnamed sources. Another bidding group, comprising buyout firms Blackstone Group LP, Carlyle Group LP, Onex Corp. and Canada Pension Plan Investment Board, has yet to submit an offer for Arconic,

  • Finance
    The Canadian Press

    Oregon bakery appeals fine for turning away lesbian couple

    The owners of a shuttered Oregon bakery fined for refusing to make a wedding cake for a lesbian couple are appealing to the U.S. Supreme Court. The Oregonian/OregonLive reports that lawyers for Melissa and Aaron Klein, former owners of Sweet Cakes by Melissa, filed the petition Monday. The Oregon Bureau

  • Rattled Investors Await Caterpillar With ‘Glass Half Empty’ View
    Finance
    Bloomberg

    Rattled Investors Await Caterpillar With ‘Glass Half Empty’ View

    Investors are looking at industrial earnings with a “glass-half-empty” mindset, according to Karen Ubelhart of Bloomberg Intelligence. Among the things emptying that glass are worries that the full impact of U.S.-China trade frictions has yet to be felt at a time when many industrial customers may be

  • Elon Musk is telling customers to use an unusual loophole if they want to take a Tesla car for a three-day 'test drive' (TSLA)
    Finance
    Business Insider

    Elon Musk is telling customers to use an unusual loophole if they want to take a Tesla car for a three-day 'test drive' (TSLA)

    Tesla CEO Elon Musk touted on Twitter a way customers can essentially get a three-day test drive of one of the company's electric cars. Musk was responding to a tweet by CoverGirl model James Charles, who doesn't meet Tesla's age requirement to test  drive one of its cars. Consumers worried

  • Alberta's Notley proposes Ottawa get into the crude-by-rail business
    Finance
    The Canadian Press

    Alberta's Notley proposes Ottawa get into the crude-by-rail business

    Alberta Premier Rachel Notley is proposing Ottawa get into the crude-by-rail business — at least temporarily — so that producers in her province can get a better price for their oil. "We are in the midst of putting together a specific business case that we'll be taking to the federal government

  • China's Central Bank to Offer More Funds for Private Companies
    Finance
    Bloomberg

    China's Central Bank to Offer More Funds for Private Companies

    The State Council announced it would support bond financing by private firms on Monday, and said the central bank will provide funding to facilitate this. The People’s Bank of China soon after announced a plan to support such issuance, without providing any details of the size of the plan, or when it

  • Trump Says He’s ‘Not Satisfied’ as Mnuchin Meets Saudi Prince
    Finance
    Bloomberg

    Trump Says He’s ‘Not Satisfied’ as Mnuchin Meets Saudi Prince

    Trump, speaking to reporters Monday on the White House lawn before leaving for a rally in Houston, said he had spoken with Prince Mohammed and is awaiting findings from “tremendously talented people” dispatched to Turkey and Saudi Arabia who were due to return to the U.S. within the next day to brief

  • Caterpillar and McDonald's earnings — What you need to know in markets on Tuesday
    Finance
    Yahoo Finance

    Caterpillar and McDonald's earnings — What you need to know in markets on Tuesday

    The stock market logged a mixed close on Monday ahead of key earnings report due out Tuesday before the market open, notably results from Caterpillar.

  • Finance
    The Canadian Press

    UK government accused of lack of action on Russian fake news

    Committee Chairman Damian Collins said that the government has fully accepted only three of the committee's 42 recommendations. "We need to see a more co-ordinated approach across government to combat campaigns of disinformation being organized by Russian agencies seeking to disrupt and undermine

  • Oculus co-founder Brendan Iribe joins exodus from Facebook
    Finance
    The Canadian Press

    Oculus co-founder Brendan Iribe joins exodus from Facebook

    A co-founder of Facebook's virtual-reality division is joining the exodus of executives to leave the company after striking it rich in lucrative sales of their startups. Oculus co-founder Brendan Iribe disclosed his decision to leave Facebook in Monday tweet, as well as a post on his Facebook page

  • How Strong Steel Might Kill Off the Next Big Battery Metal Story
    Finance
    Bloomberg

    How Strong Steel Might Kill Off the Next Big Battery Metal Story

    Prices have surged more than 800 percent in about two years, driven by Chinese demand for stronger steel. There’s also been speculation that vanadium will become a key metal for the battery industry. Steelmaking accounts for almost all demand for vanadium, an obscure silvery-grey metal thought to have

  • Pound's Brexit Swing Threatens to Rip Up BOE's Inflation Outlook
    Finance
    Bloomberg

    Pound's Brexit Swing Threatens to Rip Up BOE's Inflation Outlook

    Exchange-rate swings could push inflation up to almost 3 percent or slow it to well below the 2 percent target by early 2020, according to calculations by Bloomberg Economics. The direction will be determined by whether the U.K. leaves the European Union smoothly or without a divorce deal. BOE officials

  • Finance
    The Canadian Press

    NEB agrees to consider LNG Canada pipeline jurisdictional challenge

    The National Energy Board says it will consider a jurisdictional challenge of a pipeline approval that is a key component in a recently sanctioned $40-billion liquefied natural gas export facility in British Columbia. The federal regulator says it will accept submissions until next Monday from challenger