Loonie falls more than a cent, but parity still in the offing
The Canadian loonie hit an air pocket Thursday, dropping more than a cent on tumbling oil prices, commodities and the strengthening U.S. currency. The dollar, which is seen as a commodity-linked currency by global traders, fell 1.18 cents to close at 91.83 cents US.
The reversal of fortunes will be good news for the Bank of Canada, which has been trying to talk the loonie down from its high perch for months, but analysts don’t expect the trend to continue. “I think the long-term trend is still for a weaker U.S. and a stronger Canadian dollar, but that trend does get interrupted,” said Camilla Sutton, currency strategist for Scotia Capital. Many economists believe the loonie is headed back to parity with the greenback by late this year or early in 2010. Thursday’s down draft came after two straight days of falling oil prices.
Canwest shares surge after sale of Aussie broadcaster
Canwest Global Communications Corp. (TSX:CGS) stock surged Thursday on the Toronto Stock Exchange, a day after the broadcaster announced the sale of its majority stake in Australian broadcaster Ten Network Holdings.
The deal is worth about C$634 million, which the company said will be used to repay debt as it restructures. Canwest, which owns Global television, the National Post and an array of big-city Canadian daily newspapers, has been struggling to repay about $4 billion worth of debts and loans in recent months. One analyst said the move will help Canwest tackle its debtload, but added investors should put the sale into perspective.
“While we acknowledge this represents an important milestone in the recapitalization of Canwest, we remain of the view that there is little or no residual value in CGS shares,” BMO Capital Markets analyst Tim Casey wrote in a note on Thursday.
