Archive for October, 2010

Dollar gives up recent gains, falls against euro

Thursday, October 28th, 2010 | Finance News

NEW YORK – The dollar gave back most of its gains from the past two days on Thursday as concerns about a smaller bond-buying program by the Federal Reserve dissipated.

A handful of strong earnings reports from overseas also drew investors to European stocks at the expense of investments seen as safer, such as the U.S. dollar.

The euro climbed to $1.3926 in late trading, versus $1.3761 late Wednesday.

The dollar's movements have largely been dictated in recent weeks by expectations that the Federal Reserve would announce a new bond-buying program aimed at stimulating the economy. The measures would lower U.S. interest rates and likely weaken the dollar against other currencies.

Reports in recent days that indicated the program might be smaller than anticipated gave the dollar some new life, but those gains appear to be fleeting.

The dollar dropped to 81.07 Japanese yen from 81.71 yen a day ago, pushing it back toward its 15-year low.

The British pound rose to $1.5931 from $1.5758 Wednesday.

The dollar also fell to 1.0212 Canadian dollars from 1.0298 Canadian dollars, and fell to 0.9832 Swiss francs from 0.9917 Swiss francs.

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Risks to Canada’s economy higher: IMF

Thursday, October 28th, 2010 | Finance News

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OTTAWA (AFP) – Canada's economy remains among the top-performing of all industrialized nations, but it faces increased risks as the recovery slows, the International Monetary Fund said Thursday.

Canada has emerged rapidly from the global recession, thanks to a strong policy response and a resilient financial system.

However, the pace of its recovery has slowed in recent months amid shrinking global demand and a strengthening Canadian dollar, and near-term external risks have increased, the IMF said in its report.

The organization pointed to "increasingly stretched household balance sheets in Canada, and elevated housing market fragilities in the United States" as worrisome. According to the Bank of Canada, the average Canadian household debt-to-earnings ratio is at a record high of 145 percent.

In light of these risks, Canada has "smoothed" its approach to consolidation -- aiming to return to a budgetary surplus by 2015-2016.

Curtailing the rise in Employment Insurance premiums and allowing some unfinished infrastructure projects paid for by its stimulus program to be completed past a March 2011 deadline "are welcome," the IMF said.

But, it added, "monetary and fiscal authorities should be prepared to act should the downside risks materialize."

While the IMF also praised the government's "ambitious" program spending restraint, it said if this fails to balance the federal budget, Ottawa may have to raise taxes or cut federal transfers to Canada's 10 provinces.

"On fiscal stabilization, the government appropriately charts a course to fiscal balance over the medium term. This would put net debt-to-GDP ratio on a downward trajectory from already low levels, maintaining Canada?s standing as the strongest fiscal position in the G-7," said IMF mission chief for Canada Charles Kramer.

Finally, the report said Canada is "well positioned" to update its financial regulatory framework in line with emerging international initiatives -- which it heavily influenced.

Canada's push for a national securities regulator is an "essential part of this framework," it noted.

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Summary Box: Mortgage rates rise to 4.23 pct.

Thursday, October 28th, 2010 | Finance News

MORTGAGE RATES UP SLIGHTLY: The average rate for 30-year fixed mortgages rose to 4.23 percent, just above the lowest level in decades, according to mortgage buyer Freddie Mac.

15-YEAR LOANS UP TOO: Rates on 15-year fixed loans rose to an average of 3.66 percent.

HOUSING MARKET WEAK: Low rates haven't been much help for the struggling housing market, which recorded its worst summer in more than a decade. They have led to a modest surge in refinancing.

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