Loonie takes flight, house prices set new record & ketchup kerfuffles: BUSINESS WEEK WRAP
To be blunt, it's on a tear. After bottoming out at 68 cents in January, the Canadian dollar has staged a sustained rally, and eclipsed the 77-cent level this week. That's the highest level we've seen since October.
It's a remarkable turnaround, and it's one that's giving currency prognosticators reason to pause
"Hands up, all those who called for a 5 per cent drop in the Canadian dollar in the first three weeks of 2016," BMO economist Doug Porter said this week, "and then for it to ricochet higher by 13 per cent in the next eight weeks to be one of the strongest currencies on Earth."
Our hands certainly aren't up either, Mr. Porter.
The million-dollar question for Canadians, of course, is what happens now. And given recent experience, the experts are being a little more cautious with their predictions.
The reasons the loonie ran aground are still here: cheaper-than-normal oil, and divergent monetary policies in Canada and the U.S. Which is why at least one expert doesn't expect the loonie's recent flight to last.
"The most likely outcome is a slight depreciation," Nomura's chief economist Charles St-Arnaud told us this week. "But I'm not thinking going back to 65, 60… probably going towards 73 — roughly where we should be over the next few months."
House prices set new record
Speaking of gains, Canadian housing just keeps going higher and higher, according to the latest data released this week. Monthly stats from the Canadian Real Estate Association showed the average price of a resale home hit $500,000 for the first time ever last month.
But beneath the big headline, the numbers are showing a market moving in three speeds:
- Double digit gains in the hot markets of Toronto and Vancouver.
- Slight gains in other parts of the country.
- Declines in regions more dependent on the energy industry.
Those extremes are making the average effectively meaningless, and are reason for concern according to one economist.
"It's almost the anti-Goldilocks in that rather than not too hot and not too cold, you have the opposite extremes," BMO economist Robert Kavcic said. "You have too cold, and much too hot."
Loblaws ketchup controversy
But neither of those two stories came anywhere close to the level of interest in this next one, our most popular of the week.
The story began when one man complained that Loblaws decided to stop selling a brand of ketchup, made by French's, which competes with market leader Heinz.
A social media campaign came up behind French's because the ingredients in French's product come from Leamington, Ontario. Loblaw's pulled the product from its shelves, citing poor sales, but then backtracked on the issue and promised to continue stocking French's in response to the sudden surge of condiment nationalism.
Then an internal Loblaw's memo leaked suggesting the decision to de-list was made because French's sales were cannibalizing sales of Loblaw's in-house brand, President's Choice ketchup.
It was all quite a pickle that had Loblaw's playing catch-up to consumers. But at least one expert we spoke to thinks Canada's largest grocery chain did nothing wrong.
"It's perfectly legitimate, they have a preferred supplier called President's Choice, they've invested in it, done lots of due diligence," Carleton University professor Ian Lee said this week. " And there's absolutely nothing wrong with doing what they did, if that in fact was the real reason."
In the meantime, here's a day-by-day of our best stories of the past seven days.
- Why we have to talk about Hitler when we discuss Trump and Sanders
- Jacqueline Hansen: Kellogg's 'shocked' by video that shows man urinating in cereal factory
- Loblaw's ketchup snub prompts Canadian-inspired backlash
- Canadian dollar above 76 cents as oil output freeze meeting confirmed
- Canadians flood CRTC with complaints about $25 skinny basic cable package
- Loonie surges to 77 cents, up more than 10% since January