Canadian dollar could soon hit par with American greenback
The Canadian dollar reached a three-month high recently, reversing recent losses following the U.S. Federal Reserve’s decision not to slow its monetary stimulus.
In the near term, the loonie could reach par with the U.S. dollar, said Shaun Osborne, TD Securities’ chief FX strategist.
“Par to $1.04 (US96 cents) is the range over the course of the next one or two months,” he said.
While the Fed is still expected to slow its monetary stimulus at some point, Osborne said he’s not sure how it will affect the Canadian dollar, because tapering could be faster or slower than previously thought.
“It depends on what they do and when they do it,” he said. “We were looking for a US$10-billion taper this week and we didn’t get it. It’s difficult to say from here if that means tapering is going to wind up at a quicker pace if we’re still talking about the middle or latter part of next year to wind this thing up, or if the windup occurs over a longer time frame.”
In May, some predicted the Canadian dollar could fall to US90 cents by early 2014 and Osborne said that it is still possible.
“That might be on the cards from a longer-term point of view,” he said. “The Fed still has to taper. It’s just been delayed. So if that (a 90-cent loonie) was something people were looking for in 2014, you might see that pushed out to the latter part of next year, or the early part of 2015.”
Chinese wheat prices at record high as tight supply bites
beijing / reuters / Chinese wheat prices have hit record peaks due to dwindling high-quality supplies and growing expectations state purchase prices will rise before the planting season begins this month.
Beijing, keen to encourage farmers to grow more wheat, is expected to announce an increase in the price it pays for grain. That could stoke Chinese demand for imported wheat, triggering another round of overseas purchases, analysts said.
China has already bought more than six million tonnes of U.S. wheat, mostly soft red winter wheat, as well as Australian grain after bad weather damaged domestic crops.
Prices for standard quality wheat reached 2,560 yuan (C$430) per tonne last week, making imports competitive even after tax and freight.
“Wheat supply in the market is pretty tight,” said Zhang Weiwei, an analyst with New Era Futures.