Loonie continues to fall on interest rate expectations

The Canadian dollar has fallen to a seven-week low against the U.S. dollar after the Bank of Canada indicated it will not move to hike interest rates in the next two years.

The Canadian dollar has fallen for the third straight day against the U.S. dollar, after the Bank of Canada moved Wednesday to lower expectations of an interest rate hike.

The loonie fell one-quarter of a cent to 95.70 cents US in early afternoon trading, a seven-week low, and is down a cent and a half so far this week.

On Wednesday, Bank of Canada governor Stephen Poloz indicated the bank is not expecting to raise rates any time soon, and that a cut to interest rates may be just as likely if economic conditions do not improve.

The bank also lowered its outlook for Canadian growth for the next three years, as Canadian exports have yet to pick up.

Andrew Pyle, senior wealth adviser and portfolio manager at Scotia McLeod, said he believes the loonie could hit 90 cents US by the end of the year.

Pyle noted Poloz's background as the head of Export Development Canada as another sign the bank wants to do what it can to lower the dollar and boost exports.

"I would bet right now that the Bank of Canada would like a little bit of juice from the currency, whether it's a two- to five-cent decline back towards 90 cents to get the export sector going and to get the economy going," Pyle said in an interview on CBC's Lang & O'Leary Exchange.

Other economists also see the dollar falling, but not as quickly. In a note, Capital Economics says it sees the Canadian dollar falling to 92 cents by the end of June next year.

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Justin Trudeau shares 'steadfast' Keystone XL support in D.C.

By Meagan Fitzpatrick, CBC News Posted: Oct 25, 2013 2:39 PM ET Last Updated: Oct 25, 2013 3:44 PM ET

Liberal Leader Justin Trudeau concluded his first visit to the U.S. capital on Friday after a series of meetings with White House officials and others and following a panel discussion a day earlier where he touted the benefits of building the proposed Keystone XL pipeline.

Trudeau appeared Thursday on a panel with Madeleine Albright, former U.S. secretary of state, and Julia Gillard, Australia’s former prime minister, at a conference hosted by the Centre for American Progress.

The Montreal MP said during the talk that he supports TransCanada’s proposed pipeline that would carry crude oil from Alberta to refineries on the Gulf Coast because it would be good for Canada and the U.S.

He acknowledged that his position may have surprised some in an audience that would have included strong critics of the project.

“There were some people who raised an eyebrow, absolutely,” Trudeau told reporters on Friday. “I'm seen as a strong, young progressive with an environmental background. The fact that I'd be talking positively about the project I think got people thinking about the fact that perhaps it's not as bad as it's been caricatured.”

Trudeau added that the pipeline is “an important energy infrastructure” for both countries, will be good for the Canadian economy and that it must be done in a sustainable and properly regulated way.

A decision on whether the controversial Keystone XL pipeline can go ahead is currently in the hands of U.S. President Barack Obama and it’s not clear when he will make it. Ministers in Harper’s cabinet have made multiple trips to Washington in recent years to lobby for its approval.  Alberta Premier Alison Redford is also a frequent visitor.

Now Trudeau has added his voice to the Canadian contingent of Keystone backers who push for its approval while in Washington. “My support for Keystone is steadfast,” he said while talking on a street near the Canadian Embassy.

Not far away there is a bus shelter with an anti-Keystone poster designed by Canadian Franke James in it. James was recently in the city along with Canadian environmentalist David Suzuki for a panel discussion sponsored by the Natural Resources Defence Council. They urged the Obama administration to reject Keystone.

Many environmentalists are opposed to the pipeline and some Americans are against it because they say it won’t create all the jobs its proponents say it will and is more in Canada’s interest than in America’s. Trudeau, however, said the U.S. will benefit from the pipeline.

Liberal Leader Justin Trudeau arrives to speak to reporters during his first official visit to Washington on Friday. (Susan Walsh/Associated Press)

“There are lots of American jobs involved and there's lots of opportunities for the United States as well,” he said. “There are many Americans who support Keystone as well, so I'm not particularly worried about it being an unbalanced deal. It's just part of a longstanding working friendship between our two countries.”

While Trudeau is in favour of the Keystone pipeline, he’s not supportive of the proposed Northern Gateway project that would transport oil from Alberta to British Columbia’s coast. “They are very, very different proposals,” the Liberal leader said. Keystone, for example, has been signed off on by Canada’s energy board while the Northern Gateway line would mean bigger risks to more ecologically sensitive areas and to people in B.C. who rely on the water for their livelihoods, he said.

"It's important that we get our resources to market, but it's also important that we understand that it's not just up to governments to grant permits anymore. We have to get communities to grant permission and that's something that we need to spend more time focusing on," Trudeau said.

He was also asked about the Senate scandal dominating politics back home and said he is “very proud” of the motion put forward by his party’s leader in the upper chamber, James Cowan. He said it would encourage an open hearing.

“I’m not being overly controversial when I say I believe in the rule of law and due process and I think that's important that we continue to fight for," said Trudeau.

But when asked about the government’s budget bill that could curtail some federal workers’ right to strike, Trudeau wouldn’t bite. He would only say that he supports collective bargaining and unions generally and that he didn’t want to criticize Harper while abroad. There is a traditional protocol in politics, that when followed, involves politicians not criticizing their country's government while outside their borders.

“I feel that when I'm on a foreign trip, on foreign soil, my primary role is as a representative of Canada and a representative of the Canadian people and I try not to be too critical,” Trudeau said.

Trudeau has travelled to more than 80 countries but had never been to Washington. He met with White House officials including Gene Sperling, director of the National Economic Council, and Jason Furman, who chairs the President’s Council of Economic Advisers, during his visit.

One of his goals on the trip was to build relationships that will be important in the years to come, Trudeau said, as he works toward a bigger goal – becoming prime minister.

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Canadian beef prices could fall as Tyson stops buying

One of the world's largest producers of meat says it will stop buying Canadian cattle because of the high cost of having to follow U.S. meat labelling rules.

The decision from Tyson Foods Inc. is expected to lead to a drop in prices for Canadian producers.

Martin Unrau, president of the Canadian Cattlemen's Association, says the decision is a huge blow to the industry.       

“The cattle we raise here are the exact same type of cattle that they raise in the U.S. under the same conditions. We are using the same products. So absolutely it's a trade barrier,” Unrau told CBC News.

Tyson is the third-biggest buyer of Canadian cattle and bought about 150,000 head last year.

"Other American buyers certainly could follow suit, and that's a real concern for us," said Agriculture Minister Gerry Ritz, adding that the Tyson decision shows Canada has to diversify and find new markets.

"We have a 70 per cent reliance on the Americans for processing and for purchasing livestock. We need to move away from that, and, of course, by moving product now into the European theatre, just as soon as we get [the Canada-European Union free trade deal] ratified, certainly is the right way to go."

Canada is challenging the U.S. country-of-origin meat labelling policy with the World Trade Organization and in the U.S. courts.

The regulations track beef and pork through the meat processing and distribution systems and require labels that state where animals are born, where they are slaughtered and where they are packed.

Labels would include such information as "born, raised and slaughtered in the United States" for American meat. Cuts of meat from other countries could carry labels such as "born in Canada, raised and slaughtered in the United States."

Tyson said  it is disappointed with the U.S. rules that require labels on meat products to contain detailed information about where the products come from. It also means that meat coming from different countries has to be segregated in a warehouse and labelled differently, increasing costs for the meat packers.

"Unfortunately, we don't have enough warehousing capacity to accommodate the proliferation of products requiring different types of labels due to this regulation," Tyson spokesman Worth Sparkman wrote in an email.

"As a result, we have discontinued buying cattle shipped to our U.S. beef plants directly from Canada effective mid-October."

Sparkman said Tyson would continue buying Canadian calves for U.S. feedlots.

Cattle shipments to the U.S. were cut in half in the first year after the U.S. proposed country-of-origin labelling in 2008. There was a 58 per cent drop in slaughter hog exports.

In November, the rules become even more stringent. The Tyson decision worries Canadian feedlot operators.

“I wouldn't' say it's a death knell but it's a further strain on our industry at a time when we were looking for some relief,” said Ben Thorlakson, who owns a feed yard near Airdrie, Alta.

“We have one fewer buyer and we only had five to start with … so it's just reduced the overall demand for our cattle … and therefore the prices are lower, but that's an overall effect of this country-of-origin labelling initiative.”

The Canadian Cattlemen's Association is part of a coalition that is in the process of appealing a U.S. court ruling last month. That ruling rejected a request for an injunction against the latest version of the U.S. label policy, which is to go into effect in November.

The coalition argues the policy would be costly and offer no food safety or public health benefit.

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