These are stories Report on Business is following today. Get the top business stories through the day on BlackBerry or iPhone by bookmarking our mobile-friendly webpage.
Russia buys Canadian dollars Russia has made good on a plan to add the Canadian dollar to its international reserves. Alexei Ulyukayev, the first deputy chairman of the country's central bank, said after an event hosted by Bloomberg News last night that "we have added the Canadian dollar but haven't yet begun operations" with the loonie. He told the news agency the central bank is also considering adding the Australian dollar.
Russia has said it is overhauling the makeup of its reserves amid extreme volatility of currencies such as the U.S. dollar and euro. At the same time, the Canadian currency is gaining in stature and popularity given the country's strong economic and fiscal standings relative to its peers. There has been talk of the loonie gaining reserve currency status, though observers say it can't truly hold that position given the limited nature of its trading.
"This continues the very logical shift in the strategy of sovereign reserve managers as not only do the commodity currencies remain supported by a positive outlook for emerging market growth ... but also the fiscal positions of Australia, Canada, Norway, and New Zealand are extremely solid in comparison to the rest of their Western economy counterparts," Scotia Capital currency strategist Sacha Tihanyi said this morning. "As we have pointed to in the past however, the size of these economies relative to other major reserve currency countries like the U.S. and the euro zone ... limits the ability for currencies like [those of Australia, Canada, Norway and New Zealand]to absorb large diversification-driven flows without an inordinate amount of appreciation. However, there is no doubt that these currencies have, and will continue to benefit from foreign sovereign diversification flows."
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BP braces for showdown Executives of BP PLC are bracing for a showdown today with President Barack Obama over the environmental disaster in the Gulf of Mexico after the explosion on the Deepwater Horizon drilling rig in April. Mr. Obama and his vice-president, Joe Biden, will meet with executives of the energy giant, including its chairman Carl-Henric Svanberg. The president said last night that he will demand today that the company put aside billions of dollars to pay for the immense damage in the Gulf. Mr. Obama planned to tell Mr. Svanberg that "he is to set aside whatever resources are required to compensate the workers and business owners who have been harmed as a result of his company's recklessness.
The meeting comes amid new measures of just how much damage the spill is causing. U.S. officials yesterday revised its estimate of the amount spewing into the water to between 35,000 and 60,000 barrels a day. For more...
- Obama lashes out at BP in Oval Office address
- Big Oil points fingers at BP
- Losses 'mounting daily now' in Florida tourist mecca
Spain latest in spotlight Spain is fast overtaking Greece as the flashpoint for Europe's debt crisis. Rumours related to Spain, immediately denied today, sent the euro temporarily tumbling while the country's borrowing costs hit a fresh record. Separately today, the Financial Times reported that Spain's banks are borrowing record amounts from the European Central Bank, with €85.6-billion in borrowing last month the highest since the launch of euro zone in 1999.
"Rumours were rampant in the overnight session that Spain was negotiating a €250-billion credit facility with the U.S., IMF, and EU," said BMO Nesbitt Burns economist Benjamin Reitzes. "That hit the euro, which fell nearly a cent on the report, while equities were sold briefly as well. The rumour was quickly denied, and frankly seems ridiculous, as the U.S. is extremely unlikely to a major participant in any European loan deal. Moreover, a loan facility already exists ... so why create a separate package? Spain is planning €3.5-billion in 10 and 30-year auctions tomorrow, and the manner in which they are received by markets will be watched closely. Nerves are already fragile on negative stories over Spain's banks."
France raises retirement age France has broken faith with more than 25 years of the Mitterand legacy. Labour Minister Eric Woerth today unveiled plans to raise the country's retirement age to 62 in 2018 from the current 60. The move is aimed at helping cut the country's debt, though France's plans to get its finances under more control fall far shy of measures taken in other countries. Germany is boosting its retirement to 67 from 65, and other governments have also made plans to bring down pension costs through such moves. "We cannot at the same time promise to work less long and not have a deficit," Mr. Woerth said. The retirement age, reports said, was a major move in 1983 by France's late president Francois Mitterand. Read the story
Home construction falls in U.S. Home construction in the United States is on the decline after the expiry of a federal tax credit program that had spurred the sector. Construction starts in the U.S. fell 10 per cent in May to 593,000 on an annualized basis, driven by a 17-per-cent plunge for single family homes. Applications for new building permits also fell, dropping 5.9 per cent to their lowest level in a year, the government said. After being supported by the government's tax credit, the expected buckling in housing activity has now begun," said BMO Nesbitt Burns senior economist Jennifer Lee. "There is no question that the underlying tone in housing remains weak." Read the story
Canada's housing market slips Canada's residential real estate market stalled in May, ending more than a year of hefty gains, at least temporarily. The Canadian Real Estate Association said today sales fell 9.5 per cent from April while average prices rose just 0.5 per cent. Still, the average price of $346,881 remains more than 8 per cent above the level of a year earlier. "An early and frequent contributor to the overall economic recovery, the housing market is cooling its jets in response to a number of factors where, on balance, headwinds are becoming stronger than tailwinds," said Toronto-Dominion Bank senior economist Pascal Gauthier. "...Nonetheless, the housing market slowdown should be cushioned by an improving employment and income picture." Read the story
Money managers to merge Sceptre Investment Counsel Ltd. is merging with Fiera Capital Inc., a marriage that will form a money manager with $30-billion in assets under management. The deal is valued at more than $70-million based on Sceptre's stock price. The new firm will be named Fiera Sceptre, and, the companies said, will be "one of only a handful of independent, full service, multi-product investment firms in Canada." Read the story
Women arrested for suspected 'ambush' marketing They take their 'ambush' marketing seriously at the World Cup. South African police said today they arrested two Dutch women who could be charged in relation to what is suspected to be an ambush marketing campaign by Bavaria, the family-owned Dutch brewer. "These women, who have been part of a larger group, are suspected to be involved in organized acts to conduct unlawful commercial activities during the Denmark-Netherlands match on Monday," South African police said.
FIFA, soccer's governing body, questioned a group of more than 30 women in the stands as the Netherlands played Denmark Monday. They were all wearing orange dresses made by Bavaria, which prompted FIFA to began legal action. Budweiser is the official beer of the World Cup. Read the story
Nokia cuts forecast Nokia Corp. shares slumped today as it cut its outlook for the second quarter and full year, continuing to face mounting competition from the likes of the iPhone from Apple Inc. and the BlackBerry from Research in Motion Ltd. Nokia, the biggest mobile phone manufacturer in the world said it expects revenues in its handset unit will now be below its earlier forecast of €6.7-billion to €7.2-billion in the quarter.
From today's Report on Business:
As slick spreads, oil sands beckon
OSC challenges Magna's Stronach buyout
How burritos and cupcakes helped British bankers slip their 'golden handcuffs'
And, read Kevin Carmichael's G/8 G20 Global View summit blog