Looney sinks to 4-year low below 72 US cents – BNN Bloomberg

Here are five things you need to know this morning:

Looney takes a bath: The Canadian dollar fell below 72 US cents this morning, a level the currency has not breached since May 2020. It’s not hard to see why. Last week, the Bank of Canada cut its benchmark interest rate by 50 basis points to 3.75 percent. That’s a full percentage point below the US Federal Reserve’s floor, and there’s every reason to believe the gap will widen, not narrow, in the near term. That’s because the Bank of Canada is expected to continue aggressive tapering until it finds a so-called neutral rate somewhere in the two percent range. But the outlook for the Canadian and U.S. economies is currently diverging, with the U.S. still showing signs of strengthening on every indicator, while Canada’s data is much weaker. The Fed is expected to cut a few more times, but not as aggressively and probably not as far. This is a recipe for a weaker Canadian dollar that we are seeing now.

Oil falls after Israeli retaliation: Oil prices fell six percent after Israel retaliated with strikes on Iran last weekend, attacks that missed energy infrastructure. Brent is changing hands at around $71 a barrel, while WTI is below $68. Concerns about escalating tensions in the region have added a geopolitical risk premium to crude oil for several weeks now, but if that dissipates, all that will remain is a supply-demand picture, with the former well ahead of the latter. Israel’s relatively muted response “leaves the door open for de-escalation, and oil price dynamics this morning suggest the market shares the same view,” ING analysts Warren Patterson and Eva Manti said in a note.

Strike at the Port of Montreal: Dockers in the Port of Montreal walked off the job for 24 hours on Sunday morning due to a labor dispute with their employer. The union, which represents nearly 1,200 stevedores at Canada’s second-largest port, stopped work at 7 a.m. Sunday morning, except for certain types of operations. The move comes in addition to an ongoing refusal to work overtime and a three-day strike at two container terminals that ended earlier this month. The two sides are trying to reach an agreement but remain deadlocked after 35 rounds of mediation talks since the summer of 2023.

Boeing raises $19 billion to avoid downgrade: Aircraft manufacturer Boeing Co launched a stock sale to raise nearly $19 billion this morning one of the largest stock meetings by a public company took place. The company is diluting existing shareholders by a record amount as it tries to improve its liquidity crunch and stave off a credit downgrade that would send its debt into junk status. The company plans to sell 90 million new shares and raise about $5 billion in depository shares. If all the allotments are filled, the total price could reach $21.8 billion.

Conservatives promise to repeal sales tax on new homes worth up to $1 million: Conservative leader Pierre Poilievre says he will scrap the five percent national sales tax on new homes worth less than $1 million if he is elected prime minister, Bloomberg reports. Poilievre is set to speak to reporters in Ottawa today to outline a plan aimed at buyers struggling to enter the market amid declining affordability. Housing is expected to be a key issue in the next federal election, due to be held at some point before October 2025.