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Canada’s Housing Market Faces Headwinds Despite BoC Moves

The Bank of Canada’s 25-basis-point cut in September was at best ignored by the national market, with sales falling 1.7 per cent compared to the month before. The Bank of Canada’s recent interest rate adjustments have done little to revive the country’s housing market, which continues to struggle under the weight of broader economic concerns. In September, the central bank cut its policy rate by 25 basis points, bringing it to 2.5%. Yet, instead of sparking renewed activity, national home sales actually fell by 1.7% compared to the previous month.  Economists note that the housing market is no longer moving in lockstep with monetary policy, but is instead being shaped by regional affordability challenges, consumer psychology, and—most critically—job security fears. Uncertainty surrounding U.S. trade policy has also cast a shadow over Canada’s economic outlook. Businesses remain hesitant to invest, and households are wary of making major financial commitments such as home purchas...
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Canadian Dollar Faces Continued Weakness Amid Economic Pressures

 


Analysts predict that the Canadian dollar, or "loonie," will continue to weaken due to a combination of factors. The currency has been under significant pressure recently, falling to its lowest level in five years. Several key factors are contributing to this decline:

1. U.S. Dollar Strength: The loonie has been losing ground against the U.S. dollar, which has been gaining strength due to expectations of economic policies under the re-elected former president Donald Trump. Trump's promises of deregulation, tax cuts, and tariffs have bolstered the U.S. dollar.

2. Interest Rate Divergence: The Bank of Canada has been cutting interest rates faster than the U.S. Federal Reserve in an effort to support the Canadian economy. This divergence in monetary policy has put additional downward pressure on the loonie.

3. Political Turbulence: Political instability in Ottawa has also contributed to the loonie's weakness. Uncertainty surrounding trade policies and potential tariffs on Canadian exports to the U.S. has created a challenging environment for the currency.

4. Global Commodity Prices: The loonie is closely tied to global commodity prices, particularly oil. Fluctuations in these prices can have a significant impact on the currency's value.

Economists expect the loonie to remain weak for the foreseeable future, with potential for further declines if trade tensions escalate. However, there is also a possibility of a rebound if global commodity prices rise or if trade negotiations improve.

The continued weakness of the loonie has mixed implications for the Canadian economy. While it benefits exporters by making their products more competitive, it increases the cost of imports and makes travel to the U.S. more expensive for Canadians.

Overall, the loonie's future will depend on a complex interplay of domestic and international factors, making it a key area to watch in the coming months.



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