Skip to main content

The Globe and Mail

Loonie ends higher as Ukraine risk factor lessens

A Canadian dollar.

Jonathan Hayward/The Canadian Press

The Canadian dollar closed higher Monday as risk aversion faded with the decision by the United States and the European Union to impose only targeted sanctions after Crimeans voted on the weekend to leave Ukraine and join Russia.

The loonie rose 0.34 of a cent to end at 90.47 cents (U.S.).

European Union foreign ministers agreed to slap travel bans and asset freezes on 21 people from Russia and Crimea that they have linked to the push for the secession.

Story continues below advertisement

Also, U.S. President Barack Obama signed an executive order that names seven Russian government officials as sanctions targets. The U.S. Treasury Department also is imposing sanctions on four Ukrainians, including former president Viktor Yanukovych.

And Prime Minister Stephen Harper said his government is also putting economic sanctions and travel restrictions on senior people in Russia, Ukraine and Crimea.

Analysts say this approach targeted at individuals as opposed to general trade indicates that Western powers don't want to escalate an already fragile situation.

On the economic front, Statistics Canada said that Canadians added $2.3-billion (Canadian) of foreign securities to their holdings in January. It was the fourth successive month of such investment.

At the same time, foreign investors acquired $1.1-billion of Canadian securities, mainly in equities. As a result, the agency said that cross-border transactions in securities generated a net outflow of funds for a second consecutive month.

And U.S. factory production surged 0.8 per cent in February, nearly reversing a 0.9 per cent plunge in January that was due mainly to weather.

On the commodity markets, copper was unchanged at $2.95 (U.S.) a pound after a string of negative data from China sent prices down 8 per cent last week.

Story continues below advertisement

April crude dipped 81 cents to $98.08 a barrel. Gold prices faded $6.10 to US$1,372.90 an ounce after nervous investors pushed prices ahead last week.

Traders also looked ahead to Wednesday afternoon when the U.S. Federal Reserve makes its next interest rate announcement, followed by a news conference with new central bank chair Janet Yellen.

Traders will be looking for any change in a gauge the Fed is using for interest rate guidance – the jobless rate. Generally, markets aren't expecting a rate hike from the Fed until the middle of next year at the earliest.

Also, the Fed will likely send the message that the economy is strong enough to carry on with its program of cutting back on its bond purchases, the stimulus program that kept long-term rates low and encouraged a strong rally on stock markets.

Markets expect the Fed to cut its monthly bond purchases by another $10-billion to $55-billion a month.

Meanwhile, Chinese officials announced on the weekend that exchange rate controls would be modestly eased. It was the latest step in a plan to eventually let the yuan float freely.

Story continues below advertisement

The yuan reversed course recently after strengthening steadily for years. Analysts believe the central bank is guiding the exchange rate lower against the U.S. dollar in an effort to discourage speculators from moving money into the country to profit from the yuan's rise.

Report an error
Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨

Combined Shape Created with Sketch.

Combined Shape Created with Sketch.

Thank you!

You are now subscribed to the newsletter at

You can unsubscribe from this newsletter or Globe promotions at any time by clicking the link at the bottom of the newsletter, or by emailing us at privacy@globeandmail.com.