Traders are betting the Canadian dollar fell too far, too fast in its worst start to a year in more than four decades, as rising commodities prices and a forecast budget surplus damp speculation for interest-rate cuts.
Canadian data suggest momentum is gradually slowing for home prices and construction, supporting policy maker statements the nation’s C$2.03 trillion ($1.87 trillion) housing market will avoid a crash.
Dundee Real Estate Investment Trust and Calloway REIT are bearing the brunt of a rout among real estate, utility and telecommunications shares as rising bond yields reduce demand for high-dividend stocks.
Quebec Finance Minister Carlos Leitao maintained a goal of balancing the budget next year, and said deficits this year and last will be larger than planned as revenue misses forecasts and spending climbs.
The Canadian dollar, the sixth worst performer against the U.S. dollar this year among major currencies, is poised to rebound on North American growth amid dwindling safe assets globally, according to panelists at the Bloomberg Canadian Fixed Income Conference.
Bank of Canada Governor Mark Carney told lawmakers the Canadian economy stalled or shrank last quarter, sharing with Finance Minister Jim Flaherty the view that growth will rebound without further government stimulus.